FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

WASHINGTON, D.C. 20549

(Mark one)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to

~~(Mark~~Commission ~~one)~~file number: 0-23598

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended April 30, 2005
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		for the transition period from to

NWH, INC.
(Exact name of registrant as specified in its charter)

Commission file number: 0-23598

Delaware	13-3735316
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

156 West 56 Street, Suite 2001, New York, NY	10019
(Address of principal executive offices)	(Zip Code)

~~NWH~~(212) 582 1212 (Registrant’s telephone number, ~~INC.~~including area code)

Indicate by check mark whether the registrant (~~Exact~~1) has filed ~~name~~all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant aswas ~~specified~~required into ~~its~~file ~~charter~~such reports), and (2) has been subject to such filing requirements for the past 90 days.

Delaware		13-3735316
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)
156 West 56 Street, Suite 2001, New York, NY		10019
(Address of principal executive offices)		(Zip Code)
(212) 582 1212
(Registrant’s telephone number, including area code)

Yes x No o

Indicate by check mark whether the ~~registrant~~Registrant ~~(1) has~~is ~~filed all reports required to be filed by Section 13~~a orlarge ~~15(d) of~~accelerated ~~the~~filer, ~~Securities~~an ~~Exchange~~accelerated ~~Act~~filer, ~~of 1934 during the preceding 12 months (~~or ~~for~~a ~~such~~non-accelerated ~~shorter~~filer. ~~period that the registrant was required to file~~(as ~~such~~defined ~~reports),~~in ~~and (2)~~Rule ~~has~~12b-2 ~~been~~of ~~subject to such filing requirements for~~ the ~~past~~Exchange ~~90 days.~~Act)

~~Yes~~Large Accelerated Filer ~~ý No~~o Accelerated Filer o Non-Accelerated Filer x

Indicate by check mark whether the Registrant is ana shell ~~accelerated~~company ~~filer~~ (as defined in Rule 12b-2 of the Exchange Act)

Yes o No ýx

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value: 2,~~924~~910,~~631~~859 shares as of ~~June~~May 730, ~~2005~~2006.

NWH, Inc. Index

~~Index~~Part I — Financial Information Item 1. Unaudited Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements

Part I – Financial Information Item 1. Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Income Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements2

2NWH, Inc. Consolidated Balance Sheets

NWH, Inc.

	April 30, 2006			October 31, 2005
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	18,879,783		$	21,622,468
Trade and other receivables, net of allowances of $40,000 as of April 30, 2006 and October 31, 2005, respectively	3,201,311			3,297,684
Prepaid expenses and other current assets	550,931			417,664
Deferred income taxes	579,120			69,518
Refundable income taxes	146,042			61,120
Total current assets	23,357,186			25,468,454

Property and equipment, net of accumulated depreciation of $2,031,578 and $3,508,633, respectively	735,312			822,844
Internally developed software, net of accumulated amortization of $4,530,504 and $3,732,341, respectively	3,718,502			3,452,066
Goodwill	3,682,977			3,762,187
Other assets	418,993			425,131
Total assets	$	31,912,970		$	33,930,682

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses	$	1,659,580		$	2,015,506
Deferred revenue	506,838			556,125
Dividends payable	1,460,816			1,461,816
Total current liabilities	3,627,233			4,033,447
Note Payable	140,000			140,000
Deferred income taxes	1,416,269			1,212,365
Total liabilities	5,183,502			5,385,812

Stockholders’ equity
Preferred stock, $0.01 par value: 1,000,000 shares authorized, no shares issued or outstanding	—			—
Common stock, $0.01 par value: 20,000,000 shares authorized, 3,342,231 shares issued	33,422			33,422
Additional paid-in capital	23,200,077			23,195,991
Retained earnings	8,756,673			10,421,696
Treasury stock, 431,372 and 418,600 shares at cost, respectively	(5,260,704		)	(5,106,239		)
Total stockholders’ equity	26,729,468			28,544,870
Total liabilities and stockholders’ equity	$	31,912,970		$	33,930,682

~~Condensed Consolidated~~See ~~Balance~~accompanying ~~Sheets~~notes to unaudited consolidated financial statements.

	April 30, 2005			October 31, 2004
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	23,698,860		$	12,137,155
Marketable securities	—			14,926,737
Trade and other receivables, net of allowances of $45,000 and $40,000	3,121,294			2,862,921
Prepaid expenses and other current assets	690,424			475,895
Deferred income taxes	138,200			—
Refundable income taxes	230,924			—
Total current assets	27,839,702			30,402,708
Property and equipment, net of accumulated depreciation of $3,279,245 and $3,054,359	785,414			750,474
Internally developed software, net of accumulated amortization of $2,707,379 and $2,195,888	2,310,336			2,313,785
Goodwill	3,762,187			3,762,187
Investments and other assets	1,040,193			1,065,453
Total assets	$	35,737,832		$	38,294,607
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	2,602,548		$	2,376,072
Current portion of long-term debt	3,856			11,494
Income taxes payable	—			147,035
Dividends payable	1,461,816			1,462,316
Total current liabilities	4,068,212			3,996,917
Note payable	140,000			140,000
Deferred income taxes	691,992			692,792
Total liabilities	4,900,212			4,829,709
Stockholders’ equity
Preferred stock, $.01 par value: 1,000,000 shares authorized; no shares issued or outstanding	—			—
Common stock, $.01 par value: 20,000,000 shares authorized; 3,342,231 shares issued	33,422			33,422
Additional paid-in capital	23,195,991			23,195,991
Retained earnings	12,714,446			15,327,119
Treasury stock, 418,600 and 417,600 shares, at cost	(5,106,239		)	(5,091,634		)
Total stockholders’ equity	30,837,620			33,464,898
Total liabilities and stockholders’ equity	$	35,737,832		$	38,294,607

~~See~~NWH, Inc. ~~accompanying~~Consolidated ~~notes~~Statements toof ~~unaudited condensed consolidated financial statements.~~Income (Unaudited)

	For the Three Months						For the Six Months
	Ended April 30,						Ended April 30,
	2006			2005			2006			2005
Service revenue	$	4,919,738		$	4,770,308		$	9,559,964		$	9,418,088
Other income	—						262,729			—
Total revenue	4,919,738			4,770,308			9,822,693			9,418,088

Cost of services	2,364,904			2,255,419			4,636,485			4,600,800
Professional fees	198,700			253,410			344,380			579,666
General and administrative	1,942,697			2,139,293			4,030,739			4,197,813
Depreciation and amortization not included in cost of services	92,258			89,594			184,823			176,803
Total operating expenses	4,602,746			4,737,716			9,204,800			9,555,082

Income (loss) from operations	316,993			32,592			617,893			(136,994		)

Other income (expense):
Dividend income	198,110			137,551			395,714			137,551
Interest income	21,795			34,015			62,401			153,671
Interest expense	(1,036		)	(3,093		)	(2,203		)	(6,766		)
	218,868			168,473			456,039			284,456

Income before provision (benefit) for income taxes	535,861			201,065			1,073,932			147,462

Provision (benefit) for income taxes	(410,427		)	74,000			(193,311		)	(164,000		)

Net income	$	946,288		$	127,065		$	1,267,243		$	311,462

Net income per common share
Basic	$	0.32		$	0.04		$	0.43		$	0.11
Diluted	$	0.32		$	0.04		$	0.43		$	0.11
Weighted average number of common shares outstanding
Basic	2,912,843			2,923,631			2,917,873			2,924,139
Diluted	2,921,356			2,926,954			2,924,900			2,927,624

~~NWH, Inc~~See accompanying notes to unaudited consolidated financial statements.

~~Condensed Consolidated Statements of Income~~4

	For the Three Months Ended April 30						For the Six Months Ended April 30
	2005			2004			2005			2004
Service Revenue	$	4,770,308		$	4,373,436		$	9,418,088		$	8,559,746
Cost of services	2,255,419			2,350,541			4,600,800			4,494,783
Professional fees	253,410			179,002			579,666			397,530
General and administrative	2,139,293			1,768,549			4,197,813			3,655,743
Depreciation and amortization	89,594			76,352			176,803			142,566
Total expenses	4,737,716			4,374,444			9,555,082			8,690,622
Income (loss) from operations	32,592			(1,008		)	(136,994		)	(130,876		)
Other income (expense):
Gain on securities transactions, net	—			738,015			—			558,458
Dividend income	137,551			56,035			137,551			124,571
Interest income	34,015			65,105			153,671			134,920
Interest expense	(3,093		)	(7,587		)	(6,766		)	(23,999		)
	168,473			851,568			284,456			793,950
Income before provision (benefit) for income taxes	201,065			850,560			147,462			663,074
Provision (benefit) for income taxes	74,000			321,000			(164,000		)	250,000
Net income	$	127,065		$	529,560		$	311,462		$	413,074
Net income per common share
Basic	$	.04		$	.18		$	.11		$	.14
Diluted	$	.04		$	.18		$	.11		$	.14
Weighted average number of common shared outstanding:
Basic	2,923,631			2,924,631			2,924,139			2,924,631
Diluted	2,926,954			2,924,657			2,927,624			2,924,657

NWH, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Six Months Ended April 30,
	2006			2005
Cash flows from operating activities
Net income	$	1,267,243		$	311,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,045,551			835,432
Accretion of interest	—			(61,274		)
Change in deferred taxes	(305,698		)	(139,000		)
Bad debt expense	14,456			23,572
Changes in assets and liabilities:
Trade and other receivables	81,916			(281,945		)
Refundable income taxes	(84,922		)	(190,924		)
Prepaid expenses and other current assets	(133,266		)	(214,532		)
Other assets	85,349			(73,795		)
Deferred revenue	(49,286		)	(42,813		)
Income taxes payable	—			(147,035		)
Accounts payable and accrued expenses	(355,248		)	269,289
Net cash provided by operating activities	1,566,095			288,437

Cash flows from investing activities
Acquisition of property and equipment	(238,192		)	(259,826		)
Additions to internally developed software	(1,064,599		)	(508,042		)
Proceeds from sale of marketable securities	—			14,988,011
Cash received from asset sale	74,107			—
Net cash (used in) provided by investing activities	(1,228,684		)	14,220,143

Cash flows from financing activities
Dividends paid	(2,925,631		)	(2,924,632		)
Principal payments of debt	—			(7,638		)
Purchase of treasury stock	(154,465		)	(14,605		)
Net cash used in financing activities	(3,080,096		)	(2,946,875		)

Net (decrease) increase in cash and cash equivalents	(2,742,685		)	11,561,705
Cash and cash equivalents:
Beginning of period	21,622,468			12,137,155
End of period	$	18,879,783		$	23,698,860

4See accompanying notes to unaudited consolidated financial statements.

~~NWH, Inc.~~5

~~Condensed~~NWH, Inc. ~~Consolidated~~Notes ~~Statements~~to ofConsolidated ~~Comprehensive~~Financial ~~Income~~Statements (Unaudited)

	For the Three Months Ended April 30					For the Six Months Ended April 30
	2005		2004			2005		2004
(unaudited)
Net income (loss)	$	127,065	$	529,560		$	311,462	$	413,074
Other comprehensive income, net of tax:
Net unrealized holding gain on marketable securities arising during the period, net of income taxes of $ -0- and ($261,000), -0- and $52,457, respectively	—		(505,566		)	—		99,237
Reclassification adjustment for losses recognized in net income (loss), net of income tax benefit of $-0-, -0-,-0-, ($169,293), respectively	—		—			—		(507,215		)
Other comprehensive loss	—		(505,566		)	—		(407,978		)
Comprehensive income	$	127,065	$	23,994		$	311,462	$	5,096

1. Basis of Presentation

~~See~~The accompanying ~~notes~~unaudited consolidated financial statements of NWH, Inc. (the “Company”) have been prepared pursuant to ~~unaudited~~the ~~condensed~~rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals necessary for a fair presentation of the financial statements for these interim periods, have been recorded. Operating results for the interim period are not necessarily indicative of the results that may be expected for a full year. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2005.

5The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

~~NWH, Inc~~2. Reclassification

~~Condensed~~Certain ~~Consolidated~~reclassifications ~~Statements~~have ofbeen ~~Cash~~made ~~Flows~~in prior period’s financial statements to conform to classifications used in the current year.

	For the Six Months Ended April 30,
	2005			2004
(unaudited)
Cash flows from operating activities
Net income	$	311,462		$	413,074
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	835,432			770,624
Accretion of interest	(61,274		)	—
Loss on securities transactions, net	—			(558,458		)
Deferred income taxes	(139,000		)	(700,000		)
Bad debt expense	23,572			—
Changes in assets and liabilities
Trade and other receivables	(281,945		)	(445,474		)
Refundable income taxes	(190,924		)	(45,053		)
Prepaid expenses and other current assets	(214,532		)	(82,788		)
Investments and other assets	(73,795		)	(48,718		)
Accounts payable and accrued expenses	226,476			(30,162		)
Income taxes payable	(147,035		)	(970,426		)
Net cash provided by (used in) operating activities	288,437			(1,672,740		)
Cash flows from investing activities
Acquisition of property and equipment	(259,826		)	(202,251		)
Increase in internally developed software	(508,042		)	(405,479		)
Proceeds from sale of marketable securities	14,988,011			4,144,783
Acquisition of written call options	—			(3,585,825		)
Proceeds from sale of written call options	—			1,469,400
Net cash provided by investing activities	14,220,143			1,420,628
Cash flows from financing activities
Proceeds of short term debt	—			100,000
Dividends paid	(2,924,632		)	(2,924,632		)
Principal payments of short-term and long-term debt	(7,638		)	(117,664		)
Acquisition of treasury stock	(14,605		)	—
Principal payments of capital leases	—			(70,946		)
Net cash used in financing activities	(2,946,875		)	(3,013,242		)
Net increase (decrease) in cash and cash equivalents	11,561,705			(3,265,354		)
Cash and cash equivalents
Beginning of period	12,137,155			29,309,192
End of period	$	23,698,860		$	26,043,838

3. Critical Accounting Policies

~~See~~The ~~accompanying~~Company ~~notes~~capitalizes purchased software which is ready for service and development costs for software incurred from the time the preliminary project stage is completed until the software is ready for use. Under the provisions of Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (SOP 98-1), the Company capitalizes costs associated with software developed or obtained for internal use when both the preliminary project state is completed and the Company management has authorized further funding for the project which it deems probable to ~~unaudited~~be ~~condensed~~completed ~~consolidated~~and ~~financial~~used ~~statements~~to perform the function intended. Capitalized costs include only (1) external direct costs of materials and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, and (3) interest costs incurred, when material, while developing internal-use software. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. Capitalized software development costs are amortized using the straight-line method generally over four years, not to exceed the expected life of the product or related contract. The carrying value of capitalized software development costs is regularly reviewed by the Company, and a loss is recognized if the value of estimated undiscounted cash flows related to the asset falls below the unamortized costs.

6Research and development costs and computer software maintenance costs related to software development are expensed as incurred.

~~NWH, Inc~~4. Stock Options and Stock Based Compensation

~~Notes~~Effective November 1, 2005, the Company adopted SFAS No. 123R, “Share Based Payment” (SFAS 123R) utilizing the modified prospective method of adoption which does not require restatement of prior periods. Prior to ~~Condensed~~the ~~Consolidated~~adoption ~~Financial~~of ~~Statements~~SFAS 123R, the Company accounted for stock option grants in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees” (the intrinsic value method), and accordingly, recognized no compensation expense for stock options granted that had an exercise price equal to the fair market value of the underlying common stock at the date of grant. There was no pro-forma net income or net income per share effect, as if the fair value method in FASB Statement No. 123 had been used in the prior period to account for share-based compensation because all outstanding options during the period were insignificant.

~~(unaudited)~~Under the modified prospective approach, SFAS No. 123R applies to new awards and to awards that were outstanding on November 1, 2005 that are substantially modified, repurchased or cancelled. Under the modified prospective approach, compensation cost to be recognized in fiscal 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of November 1, 2005 based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and compensation cost for all share-based payments granted subsequent to November 1, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Compensation cost recognized in the six month period ended April 30, 2006 was $4,086. Under APB Opinion No. 25, there would have been no compensation expense for stock option grants for the six months ended April 30, 2005.

~~1. Basis of Presentation~~6

~~The~~On ~~accompanying unaudited condensed~~April 30, ~~consolidated financial statements of NWH~~2006, ~~Inc.~~ (the “Company”) ~~have~~had ~~been prepared~~three ~~pursuant~~share-based tocompensation ~~the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly~~plans, ~~they~~which doare ~~not include all of the~~described ~~information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements~~below. InThe ~~the opinion~~Company ofhas ~~management, all adjustments, consisting solely of normal recurring accruals necessary for~~ a ~~fair~~policy ~~presentation~~ of ~~the~~satisfying ~~financial~~option ~~statements~~exercises for these interim periods, have been recorded. Operating results for the interim period are not necessarily indicative of the results that may be expected for a full year. These financial statements should be read in conjunction with ~~the~~newly ~~consolidated~~issued ~~financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2004~~shares.

The Black-Scholes option pricing formula was used to estimate the fair value of awards under share-based payment arrangements. Expected volatilities are based on historical volatility of the Company’s Common Stock. The Company uses historical data to estimate option exercises within the valuation model. The expected term of options represent the period of time that options granted are expected to be outstanding. The risk free rate for periods within the contractual life of the option is based on the current U.S. Treasury yield in effect at each period end. The more significant assumptions underlying the determination of such fair value for options granted in 2005 and 2006 include: (i) weighted average risk-free interest rates of 4.3% in 2005 and 4.0% in 2006; (ii) weighted average expected option life of 5 years; (iii) an expected volatility of 19% in 2005 and 2006; (iv) an expected dividend yield of 14% in 2005 and 16% in 2006; and (v) annual dividend of $2 per share which is not an indication of future dividend policy but an assumption based on historical payment of dividends. ~~Reclassification~~

~~Certain~~The ~~reclassifications~~1993 Stock ~~have~~Option ~~been~~Plan, ~~made~~as inamended, and the 1997 Equity Incentive Plan ~~prior~~(collectively, the “Plans”) permit the grant of options to key employees (including officers), directors, advisors, and independent consultants to the Company or to any of its subsidiaries. The vesting period is at the discretion of the Board of Directors. For options currently outstanding under the Plans, there are no service requirements as all options are fully vested upon issuance. Although 50,000 options remain outstanding under the 1993 Stock Option Plan, no further grants may be made under such Plan. The Company originally authorized 300,000 shares of Common Stock for option issuances under the 1997 Equity Incentive Plan. At April 30, 2006 the Company had 71,154 options available for grant under the Plans. Options granted to employees may be designated as incentive stock options (“ISO’s”) ~~financial~~or non-qualified ~~statements~~stock tooptions ~~conform~~(“NQSO’s”), as defined by the Internal Revenue Service. Options granted to ~~classifications~~independent ~~used~~consultants inand ~~the~~other non-employees may ~~current~~only ~~year~~be designated NQSO’s.

3The exercise price of options granted under the Plans may not be less than 100% of the fair market value of the Common Stock on the date of grant. ~~Critical~~ ~~Accounting~~Generally, options ~~Policies~~will be exercisable for a term that will not exceed ten years from the date of grant. Options outstanding under the Plans have a five year life.

~~The~~A ~~Company capitalizes purchased software~~summary ~~which is ready for service and development costs for software incurred from the time the preliminary project stage is completed until the software is ready for use. Under the provisions~~ of ~~Statement of~~option ~~Position~~activity ~~98-1,~~under ~~Accounting for~~ the ~~costs~~Plans ofas Computer Software Developed or Obtained for Internal Use (SOP 98-1), the Company capitalizes costs associated with software developed or obtained for internal use when both the preliminary project stage is completed and Company management has authorized further funding for the project which it deems probable will be completed and used to perform the function intended. Capitalized costs include only (1) external direct costs of ~~materials~~ ~~and services consumed in developing or obtaining internal-use software~~April 30, ~~(2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project~~2006, and ~~(3) interest costs incurred, when material, while developing~~changes ~~internal-use~~during ~~software. Capitalization of such costs ceases no later than~~ the ~~point~~six ~~which~~months ~~the~~then ~~project~~ended is ~~substantially complete~~presented ~~and ready for its intended purpose.~~below:

Research and development costs and computer software maintenance costs related to software development are expensed as incurred. Capitalized software development costs are amortized using the straight-line method generally over four years, not to exceed the expected life of the product. The carrying value of capitalized software development costs is regularly reviewed by the Company, and a loss is recognized if the value of estimated undiscounted cash flow benefit related to the asset falls below the unamortized cost.

							Weighted
							Average
			Weighted		Weighted		Remaining	Aggregate
			Average		Average Grant		Contractual	Intrinsic
	Share Options		Exercise Price		Date Fair Value		Term (Years)	Value

Outstanding, October 31, 2005	165,769		$	15.98	$	1.78
Issued	65,000		$	13.05	$	0.07
Expired	(86,154	)	$	17.14	$	1.87
Outstanding, April 30, 2006	144,615		$	13.97	$	0.95	2.75	—
Exercisable, April 30, 2006	144,615		$	13.97	$	0.95	2.75	—

4In March 2000, the Company adopted the 2000 Director Option Plan (Director Plan) covering an aggregate of up to 70,000 shares of Common Stock, pursuant to which the Company shall grant 5 year options for 5,000 shares upon the appointment of an outside director and 2,500 shares annually to each outside director on the date of the annual stockholders meeting. ~~Recently~~ ~~Issued~~The ~~Accounting~~exercise price of options granted under the ~~Pronouncements~~this plan may not be less than 100% of the fair market value of the Common Stock on the date of grant. These options have a five year life. Options granted upon appointment vest ratably over three years beginning with the grant date. Options granted annually vest immediately. There are no service requirements for options under this plan. At April 30, 2006 the Company had 22,500 options available for grant under the Director Plan.

In December, 2004, the FASB issued FASB statement No. 123R, “Share-Based Payment” (FAS 123R), a revision of FASB statement No. 123, “Accounting for Stock-Based Compensation” which addresses financial accounting and reporting for costs accounted with stock-based compensation. FAS 123R addresses all forms of share-based payment (“SBP”) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. FAS 123R requires the Company to adopt the new accounting provisions beginning in our fourth quarter of 2005. Under the Modified Prospective Method, the Company does not anticipate recording any compensation expense at time of adoption since all options granted were fully vested.7

7A summary of option activity under the Director Plan as of April 30, 2006, and changes during the six months then ended is presented below:

5. Stock Options

							Weighted
							Average
			Weighted		Weighted		Remaining	Aggregate
			Average		Average Grant		Contractual	Intrinsic
	Share Options		Exercise Price		Date Fair Value		Term (Years)	Value
Outstanding, October 31, 2005	50,000		$	15.86	$	1.39
Expired	(7,500	)	$	12.75	$	1.63
Outstanding, April 30, 2006	42,500		$	16.40	$	1.34	2.71	—
Exercisable, April 30, 2006	42,500		$	16.40	$	1.34	2.71	—

~~The~~A ~~Company adopted the disclosure-only~~summary ~~provisions~~ of ~~SFAS~~the ~~No. 148,~~status ~~“Accounting for Stock-Based Compensation Transition and Disclosure an amendment~~ of ~~FAS~~the ~~123.” This statement encourages, but does not require, companies to adopt a fair value based method for determining expense related to stock-based compensation. The~~ Company’s ~~continues to account for stock~~non-~~based~~vested ~~compensation~~shares ~~using~~under the ~~intrinsic~~Director ~~value~~Plan ~~method as~~for ~~prescribed~~the ~~under~~six ~~Accounting~~months ~~Principles~~ended ~~Board Opinion No.~~April 2530, ~~“Accounting for~~2006 ~~Stock~~is ~~Issued~~presented to Employees,” and related Interpretations. Accordingly, no compensation cost has been recognized with regard to options granted under the Plan in the accompanying financial statements. The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of FAS 123 to stock-based employee compensation.below:

	(unaudited)
Non-Vested Shares						Shares
	For the Three months Ended April 30,					For the Six months Ended April 30,
Balance, October 31, 2005				5,000
	2005		2004			2005		2004
Vested				(5,000			)
Net income
Balance, April 30, 2006				—
As reported	$	127,065	$	529,560		$	311,462	$	413,074
Deduct total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects	—		(6,500		)	—		(13,180		)
Pro forma	$	127,065	$	523,060		$	311,462	$	399,894
Earnings per share
Basic – as reported	$	0.04	$	0.18		$	0.11	$	0.14
Basic – pro forma	$	0.04	$	0.18		$	0.11	$	0.13
Diluted – as reported	$	0.04	$	0.18		$	0.11	$	0.14
Diluted – pro forma	$	0.04	$	0.18		$	0.11	$	0.13

~~6. Earnings~~No ~~Per~~cash was ~~Share~~received from option exercises under any option plans for the quarter and six months ended April 30, 2006.

~~Basic earnings per share is computed as net income divided by the weighted average number of common shares outstanding for the period~~5. ~~Diluted~~Earnings ~~earnings~~Per ~~per share includes the dilutive effect of the assumed exercise of stock options. Reconciliation of the weighted average shares outstanding for basic and diluted earnings per share are as follows:~~Share

	For the Three Months Ended April 30,		For the Six Months Ended April 30,
	2005	2004	2005	2004
Weighted average common shares outstanding:
Basic EPS shares	2,923,631	2,924,631	2,924,139	2,924,631
Dilutive effect of stock options	3,323	26	3,485	40,026
Diluted EPS	2,926,954	2,924,657	2,927,624	2,964,657

Basic earnings per share is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share includes the dilutive effect of the assumed exercise of stock options. Reconciliation of the weighted average shares outstanding for basic and diluted earnings per share is as follows:

	For the Three Months		For the Six Months
	Ended April 30,		Ended April 30,
	2006	2005	2006	2005

Weighted average common shares outstanding:
Basic EPS shares	2,912,843	2,923,631	2,917,873	2,924,139
Dilutive effect of stock options	8,513	3,323	7,027	3,485
Diluted EPS shares	2,921,356	2,926,954	2,924,900	2,927,624

~~7. Segment Information~~8

~~The~~6. ~~company~~Segment ~~currently operates in two segments; the holding company, including certain investments which are not currently material, and in ENS.~~Information

	NWH and Other			ENS			Total
Three months ended April 30, 2005
Revenues:
Service	$	—		$	4,770,308		$	4,770,308
Expenses
Cost of services, professional fees, and general administrative	(563,154		)	(4,084,968		)	(4,648,122		)
Depreciation and amortization	(3,941		)	(85,653		)	(89,594		)
Income (loss) from operations	$	(567,095	)	$	599,687		$	32,592
Capital expenditure for property and equipment and internally developed software including capitalized lease obligations	$	9,071		$	455,119		$	464,190

The Company currently operates in two segments: the holding company, including certain investments which are currently not material; and its investments in ENS.

	NWH and Other			ENS			Total
Three months ended April 30, 2004
Revenues:
Service	$	—		$	4,373,436		$	4,373,436
Expenses
Cost of services, professional fees, and general and administrative	(485,137		)	(3,812,955		)	(4,298,092		)
Depreciation and amortization	—			(76,352		)	(76,352		)
Income (loss) from operations	$	(485,137	)	$	484,129		$	(1,008	)
Capital expenditure for property and equipment and internally developed software including capitalized lease obligations	$	—		$	326,767		$	326,767

Segments were determined based on services provided by each segment. Accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including net interest and dividends, depreciation, amortization, and gain on securities transactions.

9The following table summarizes the financial information of the operating segments as of and for the three and six months ended April 30, 2006 and 2005:

	NWH and Other			ENS			~~Total~~Segment Totals			Eliminations			Consol. Totals
Six months ended April 30, 2005
Three months ended April 30, 2006
Revenues:
Revenues from external customers	$	—		$	4,919,738		$	4,919,738		$	—		$	4,919,738
Service	$	—		$	9,418,088		$	9,418,088
Cost of services (excluding depreciation and amortization), professional fees, and general and administrative	$	(465,360	)	$	(3,610,109	)	$	(4,075,468	)	$	—		$	(4,075,468	)
Expenses
Segment (loss) income	$	(465,360	)	$	1,309,630		$	844,270		$	—		$	844,270
Cost of services, professional fees, and general and administrative	(1,144,059		)	(8,234,220		)	(9,378,279		)
Expenditure for segment assets	$	—		$	513,630		$	513,630		$	—		$	513,630
Depreciation and amortization	(6,749		)	(170,054		)	(176,803		)
Three months ended April 30, 2005
Income (loss) from operations	$	(1,150,808	)	$	1,013,814		$	(136,994	)
Revenues from external customers	$	—		$	4,770,308		$	4,770,308		$	—		$	4,770,308
Total assets	$	24,238,130		$	11,528,702		$	35,737,832
Cost of services (excluding depreciation and amortization), professional fees, and general and adminstrative	$	(563,154	)	$	(3,745,655	)	$	(4,308,809	)	$	—		$	(4,308,809	)
Capital expenditure for property and equipment and internally developed software including capitalized lease obligations	$	9,071		$	758,797		$	767,868
Segment (loss) income	$	(563,154	)	$	1,024,653		$	461,499		$	—		$	461,499
Expenditure for segment assets	$	9,071		$	455,117		$	464,188		$	—		$	464,188
Six months ended April 30, 2006
Revenues from external customers	$	—		$	9,822,693		$	9,822,693		$	—		$	9,822,693
Cost of services (excluding depreciation and amortization), professional fees, and general and administrative	$	(879,734	)	$	(7,279,515	)	$	(8,159,250	)	$	—		$	(8,159,250	)
Segment (loss) income	$	(879,734	)	$	2,543,178		$	1,663,444		$	—		$	1,663,444
Expenditure for segment assets	$	54,806		$	1,247,985		$	1,302,791		$	—		$	1,302,791
Segment assets	$	29,042,310		$	8,114,662		$	37,156,972		$	(5,234,452	)	$	31,922,520
Segment liabilities	$	3,008,709		$	6,029,736		$	9,038,445		$	(3,924,603	)	$	5,113,842
Six months ended April 30, 2005
Revenues from external customers	$	—		$	9,418,088		$	9,418,088		$	—		$	9,418,088
Cost of services (excluding depreciation and amortization), professional fees, and general and adminstrative	$	(1,144,059	)	$	(7,575,590	)	$	(8,719,649	)	$	—		$	(8,719,649	)
Segment (loss) income	$	(1,144,059	)	$	1,842,498		$	698,439		$	—		$	698,439
Expenditure for segment assets	$	9,071		$	758,796		$	767,867		$	—		$	767,867
Segment assets	$	37,817,230		$	7,766,515		$	45,583,745		(9,840,913		)	$	35,742,832
Segment liabilities	$	2,927,119		$	8,582,053		$	11,509,172		$	(6,608,960	)	$	4,900,212

	NWH and Other			ENS			Total
Six months ended April 30, 2004
Revenues:
Service	$	—		$	8,559,746		$	8,559,746
Expenses
Cost of services, professional fees, and general and administrative	(987,900		)	(7,560,156		)	(8,548,056		)
Depreciation and amortization	(500		)	(142,066		)	(142,566		)
Income (loss) from operations	$	(988,400	)	$	857,524		$	(130,876	)
Total assets	$	32,499,354		$	10,748,645		$	43,247,999
Capital expenditure for property and equipment and internally developed software including capitalized lease obligations	$	—		$	802,817		$	802,817

~~8. Income~~The following ~~Taxes~~represents the reconciliation of segment (loss) income and (loss) income before income taxes:

The provision (benefit) for income taxes for the three and six months ended April 30, 2005 includes a revision of a prior year tax estimate of $-0- and $206,000, respectively.

	NWH and Other			ENS			Segment Totals			Eliminations			Consol. Totals
Three months ended April 30, 2006
Segment (loss) income	(465,360		)	1,309,630			844,270			—			844,270
Depreciation and amortization	(7,678		)	(519,600		)	(527,278		)	—			(527,278		)
Dividend income	198,110			—			198,110			—			198,110
Interest income	31,662			10,272			41,934			(20,139		)	21,795
Interest expense	—			(23,420		)	(23,420		)	22,384			(1,036		)
(Loss) income before income taxes	$	(243,266	)	$	776,882		$	533,616		$	2,245		$	535,861


Three months ended April 30, 2005
Segment (loss) income	$	(563,154	)	$	1,024,653		$	461,499		$	—		$	461,499
Depreciation and amortization	(3,941		)	(424,966		)	(428,907		)	—			(428,907		)
Dividend income	137,551			—			137,551			—			137,551
Interest income	53,190			11,209			64,399			(30,384		)	34,015
Interest expense	—			(44,807		)	(44,807		)	41,714			(3,093		)
(Loss) income before income taxes	$	(376,354	)	$	566,089		$	189,735		$	11,330		$	201,065

Six months ended April 30, 2006
Segment (loss) income	(879,734		)	2,543,178			1,663,444			—			1,663,444
Depreciation and amortization	(15,356		)	(1,030,195		)	(1,045,551		)	—			(1,045,551		)
Dividend income	395,714			—			395,714			—			395,714
Interest income	88,281			19,867			108,148			(45,747		)	62,401
Interest expense	—			(51,214		)	(51,214		)	49,138			(2,076		)
(Loss) income before income taxes	$	(411,095	)	$	1,481,636		$	1,070,541		$	3,391		$	1,073,932


Six months ended April 30, 2005
Segment (loss) income	$	(1,144,059	)	$	1,842,498		$	698,439		$	—		$	698,439
Depreciation and amortization	(6,749		)	(828,684		)	(835,433		)	—			(835,433		)
Dividend income	137,551			—			137,551			—			137,551
Interest income	240,456			19,996			260,452			(106,781		)	153,671
Interest expense	(201		)	(127,305		)	(127,506		)	120,740			(6,766		)
(Loss) income before income taxes	$	(773,002	)	$	906,505		$	133,503		$	13,959		$	147,462

10Expenditures for segment assets include property and equipment and internally developed software including capitalized lease obligations.

9Adjustments represent the elimination of the notes payable from ENS to NWH and the related interest and NWH’s investment in ENS and other subsidiaries. ~~Dividends~~

~~On May 2, 2005, the Board of Directors of the Company declared a quarterly dividend of $0~~7.30 per share, plus a special dividend of $0.20 per share. The dividend, aggregating $0.50 per share, payable in cash on August 4, 2005, to stockholders of record at the close of business on July 29, 2005. Dividends

On ~~February~~November 73, 2005, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share, plus a special dividend of $0.20 per share. The dividend , aggregating $0.50 per share, was paid ~~in cash~~ on ~~May~~February 43, ~~2005~~ 2006 to the shareholders of record at the close of business on ~~April~~January 2827, ~~2005~~ 2006.

11On February 13, 2006, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share, plus a special dividend of $0.20 per share. The dividend, aggregating $0.50 per share, was paid in cash on May 10, 2006 to the shareholders of record at the close of business on April 27, 2006.

~~ITEM 2~~8. ~~MANAGEMENT’S DISCUSSION~~ Arbitration ~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Award

~~NWH, Inc. (“NWH” or the~~The “Company”)’s ~~owns~~arbitration ~~and~~with ~~operates~~a ~~Electronic~~major ~~Network~~customer ~~Systems, Inc.~~over ~~(“ENS”),~~additional abusiness ~~payer~~opportunities ~~services~~was ~~organization~~resolved ~~that~~with ~~connects~~an ~~healthcare~~award ~~payers and providers using state~~ of ~~the~~$1,000,757 ~~art~~to ~~proprietary~~ENS, ~~software~~which ~~and~~was ~~telecommunications~~paid in ~~services~~August, ~~for~~2005. ~~most healthcare~~ENS ~~payment~~received ~~and~~an ~~insurance~~additional ~~validation~~award ~~transactions.~~of ~~The~~$262,729 ~~Company focuses~~representing ~~its~~recovery ~~efforts~~of ona ~~the~~portion ~~development~~ of ~~ENS’~~the ~~business~~related ~~and~~legal ~~continues~~costs ~~its~~which ~~business~~has ~~of acquiring~~been ~~and~~reflected ~~disposing of interests~~ in the ~~healthcare~~first ~~and~~quarter ~~other~~of ~~business~~fiscal ~~areas~~2006.

~~The~~In connection ~~Company~~with ~~was~~this ~~incorporated~~matter and in ~~Delaware~~accordance ~~under~~with the terms of the Company’s ~~name~~services ~~National~~agreement ~~Wireless~~with ~~Holdings~~this ~~Inc.~~customer, onthis ~~August~~customer terminated the services agreement effective October 31, ~~1993~~2006. ~~The~~ ENS ~~Company’s~~may ~~fiscal~~continue ~~year~~to ~~ends~~provide onbusiness services after October 31, 2006 for this customer for electronic transactions. Paper services for this customer accounted for 29%, 31% and 25% of ENS’ total revenues in fiscal ~~year~~years ~~ends~~2005, on2004 ~~September~~and 2003. There is no assurance that this customer will continue any ENS services past October 3031, 2006.

ENS is a payer services organization that connects payers (i.e., insurance companies and third party administrators) and providers (i.e., doctors, group practices and other healthcare providers) using state of the art proprietary software and telecommunications services for most healthcare payment and insurance validation transactions. ENS provides a state of the art technology platform for web based graphical user interfaces on a national basis, which enables its clients, both payers and providers, to comply fully with applicable regulatory requirements such as those imposed by HIPAA. ENS’ service offerings address the full array of evolving industry needs in this focused area with a complete cycle of services from a single point of entry (a personal computer in the client’s office) for both providers and payers, compatible with multiple system and database operating environments. These services include an Internet transactions portal, payer transactions hosting, electronic data interchange, Pre-adjudication software services (PASStm), scanning, optical character recognition and data entry of paper claims and correspondence and mailroom services. ENS generates revenue through recurring subscriptions, flat or per transaction fees and revenue sharing.10

~~Over 54,000 providers are connected to ENS’ e-commerce and Internet services which represents a 47% increase over the prior year~~9. Through payer arrangements, ENS also currently conducts daily paper to e-commerce claim conversion for another 185,000 healthcare providers. ENS also experienced a 32.6% increase in contracted billable provider sites over the prior year. ~~All~~Income of ENS’ growth was obtained through internal sales versus acquisition. As of June 7, 2005, ENS was connected to over 1,200 payers, including commercial healthcare plans, managed care organizations, Blue Cross/Blue Shield plans, Medicare, Medicaid and CHAMPUS. Nearly 90% of all electronic claims received by ENS are directly submitted to contracted payers.Taxes

~~We focus on the current and future connectivity and~~The ~~transactions~~benefit ~~processing~~for ~~requirements~~income oftaxes ~~the healthcare industry. We provide healthcare providers with a secure infrastructure~~ for ~~web-based~~the ~~and~~six ~~private~~months ~~network~~ending ~~transactions consisting of~~April 30, ~~among~~ ~~others,~~2006 ~~electronic medical claims processing, electronic claims tracking~~includes ~~and~~the ~~patient~~release ~~eligibility~~of ~~verification.~~tax Wereserves ~~also provide health care payers e-commerce connectivity with their provider constituency~~ as ~~well~~a asresult ~~paper claims~~of ~~conversion,~~utilizing ~~pre-adjudication,~~federal ~~reporting,~~net ~~education~~operating ~~and marketing support~~loss tocarryforwards ~~increase utilization~~ of ~~e-commerce in this industry~~$428,000. ~~Our~~The ~~strategy~~benefit ~~for~~also ~~the future~~includes ~~is to facilitate~~ the ~~migration~~revision of ~~provider~~prior ~~and payer clients from their~~year ~~current~~tax ~~inefficient,~~estimates ~~non-integrated transactions processing environments to efficient, seamlessly integrated applications utilizing the transactions processing capabilities~~ of ~~Health-e Networkâ~~$111,000. ~~Traditional applications linked to on-all-the-time Internet~~

1210. Subsequent Event

~~capabilities~~On orMay ~~Application~~25, ~~Service~~2006, ~~Provider~~the ~~(ASP) environments~~Company ~~will~~announced bethat ~~able~~it tohad entered ~~route~~into ~~real-time~~an ~~transactions~~Agreement to and ~~from~~Plan ~~all payers~~of ~~utilizing~~Merger ~~Health-e~~dated ~~Networkâ. We~~as ~~believe~~of ~~that~~May ~~the~~25, ~~transition~~2006 to(the “Merger ~~these~~Agreement”), ~~new levels~~with ofIngenix, ~~integrated~~Inc., ~~transactions~~a ~~processing~~Delaware ~~capabilities~~corporation ~~will~~(“Parent”), ~~drastically~~and ~~change~~Mogul ~~how~~Acquisition ~~the~~Corporation, ~~business~~a ofDelaware ~~healthcare~~corporation isand ~~conducted~~a ~~among~~direct ~~healthcare~~wholly owned ~~participants.~~subsidiary Weof ~~plan~~Parent to(“Merger ~~continue~~Sub”). Pursuant to ~~expand~~the ~~this~~terms ~~transactions~~of ~~infrastructure~~the ~~as management~~Merger ~~believes~~Agreement, ~~these~~Merger ~~applications~~Sub will ~~evolve~~merge with and into ~~viable~~the ~~and~~Company, ~~widely~~with ~~used systems~~the ~~over~~Company ~~the~~surviving ~~next~~as ~~three~~a towholly-owned subsidiary ~~five~~of ~~years~~Parent.

~~ENS~~The ~~Services~~Merger –Agreement ~~Health-e~~includes ~~Networkâ~~customary representations, warranties and covenants of the parties to the merger. The merger is conditioned on the approval of the Company’s stockholders and certain other closing conditions.

~~ENS’~~Parent ~~Health-e~~will ~~Networkâ~~pay ~~suite~~$18.24 ofper ~~services~~share ~~addresses all~~ of the ~~healthcare~~ ~~industry~~Company’s common ~~administrative~~stock ~~transaction~~at ~~processing~~the ~~needs,~~closing ~~both e-commerce~~as ~~and~~merger ~~paper. As~~consideration ato ~~provider~~the ~~of a~~Company’s ~~full-cycle~~stockholders. The ~~payer~~parties ~~and~~also ~~provider~~intend ~~e-commerce~~to cancel ~~services,~~all ~~ENS~~of ~~enhances~~ the ~~providers~~Company’ ~~and~~s ~~payers’~~outstanding ~~administrative~~stock ~~efficiency. The~~options ~~service~~at ~~offerings~~the ~~range~~closing, ~~from~~with payments ato ~~front-end~~holders ~~data~~in ~~capture/transmission software,~~respect toof ~~advanced~~such ~~pre-adjudication~~cancellations ~~software,~~in tolump ~~simple~~sum ~~mailroom services. ENS~~cash ~~currently provides~~payments, ~~e-commerce~~reduced, ~~connectivity~~but tonot ~~over~~below 1zero,~~200~~ ~~payers~~by ~~for~~any ~~the~~exercise ~~e-commerce~~prices ~~claims component~~and oftax ~~Health-e~~withholdings. The ~~Networkâ~~Company and ~~provides~~Parent ~~several~~currently ~~payers~~expect ~~with~~the ~~connectivity~~merger ~~for~~to ~~the~~close ~~entire~~in ~~suite~~the ofthird ~~HIPAA-mandated~~calendar ~~administrative~~quarter ~~transactions between~~of ~~payers and providers~~2006.

~~Health-e~~In ~~Networkâ~~addition, ~~includes~~the Company has agreed, among other things and subject to certain exceptions as described in the ~~following:~~Merger Agreement, (i) to conduct its business in the ordinary course consistent with past practice during the interim period between the execution of the Merger Agreement and consummation of the merger, (ii) not to engage in certain transactions during such period and (iii) to cause a special stockholder meeting to be held to consider approval of the merger and the other transactions contemplated by the Merger Agreement.

~~• Healthcare~~The ~~e-Commerce Transactions~~Merger ~~Processing ENS~~Agreement ~~delivers~~prohibits ~~multiple~~the ~~applications~~Company ~~that~~from ~~enable~~soliciting ~~healthcare~~or ~~providers~~entertaining alternative business acquisition proposals, subject to ~~conduct~~certain ~~key~~exceptions ~~healthcare~~for ~~transactions~~proposals ~~easily~~that ~~with many~~are ~~payers. ENS~~determined ~~provides~~in ~~these~~good faith to ~~e-commerce~~constitute ~~applications~~or ~~through~~to ~~the~~be ~~Internet~~reasonably ~~and~~likely onto ~~multiple~~constitute ~~operating systems~~a superior proposal. ~~ENS~~ The Merger Agreement also ~~delivers~~contains ~~transaction processing~~certain ~~capabilities~~termination torights ~~strategic~~for ~~partners,~~both ~~such~~the asCompany and ~~physician~~Parent. Either ~~management~~party may terminate ~~software~~the ~~vendors~~Merger ~~which,~~Agreement ~~with~~if ~~their~~the ~~own~~merger ~~software,~~is ~~access~~not ~~payers~~consummated toon ~~conduct~~or before September 30, ~~electronic~~2006, ~~business~~if ~~transactions~~the ~~via~~merger ~~use~~is ofnot ~~ENS’~~approved ~~Software~~by ~~Developer~~the Company’s ~~Kit (SDK). ENS~~stockholders ~~currently~~or ~~processes~~upon ~~and~~other ~~routes~~customary ~~medical~~events. Parent ~~and~~may ~~hospital~~terminate the ~~claims,~~Merger ~~eligibility~~Agreement ~~requests~~if ~~and~~the ~~responses,~~Company’s ~~claims status,~~Board ~~claims~~of ~~tracking,~~Directors ~~claim~~changes ~~payment~~or ~~remittance~~does ~~information, reporting,~~not ~~referral~~reaffirm ~~and~~its ~~authorization~~recommendation ~~transactions~~of the merger. ~~ENS~~Upon ~~services~~termination ~~support all~~ of the ~~HIPAA-defined~~Merger ~~transactions~~Agreement ~~and~~under ~~deliver~~specified circumstances, tothe ~~providers~~Company ~~various~~may ~~methods~~be ofrequired ~~conducting~~to ~~those~~pay ~~transactions~~Parent ~~with~~a ~~payers~~termination fee of approximately $2.15 million.

~~• Provider~~Parent ~~Connectivity~~has ~~(Xpedite™~~also )executed ~~enables~~voting ~~ENS~~agreements towith stockholders ~~identify~~who ~~the~~hold ~~paper~~approximately ~~and manual~~16.6% ~~transaction volumes~~ of athe ~~payer’s~~outstanding ~~provider~~voting ~~groups,~~stock ~~target high paper~~of ~~submitters,~~the ~~track internal progress~~Company, ~~and~~pursuant ~~market specifically~~ to ~~selected healthcare~~which ~~transaction~~the ~~submitters. Based on~~stockholders ~~payer~~have ~~specific~~given ~~criteria,~~Parent ~~ENS~~a ~~assigns~~proxy ~~different~~to vote ~~levels~~all of ~~internal~~the ~~resources to~~shares ~~convert~~of ~~these~~the ~~providers~~Company’s tocommon ~~electronic~~stock ~~business~~that ~~processes with~~ the ~~payer. The~~stockholders ~~Xpediteä~~beneficially ~~conversion~~own ~~program~~in ~~then~~favor ~~goes beyond the sales process and combines efforts~~ of ~~all~~adoption ~~ENS internal departments. The purpose~~ of ~~Xpediteä~~the isMerger toAgreement ~~connect~~and ~~providers~~approval ~~on behalf~~ of ~~payer~~ ~~organizations~~the tomerger ~~make~~and ~~the~~against ~~participants~~any ~~more~~alternative ~~efficient~~business ~~through~~acquisition ~~e-commerce~~proposal.

~~• Automated~~ITEM ~~Document ServicesÔ (ADSÔ) provides payers the complete front-end handling and conversion (imaging/scanning) of paper claims forms to an e-commerce format~~2. ~~Paper~~MANAGEMENT’S ~~claims still~~DISCUSSION ~~constitute~~AND ~~from~~ANALYSIS ~~55%~~OF toFINANCIAL ~~60%~~CONDITION ofAND ~~provider~~RESULTS ~~claims~~OF ~~volume industry-wide to commercial payers. As the claims are converted to an electronic format, ENS captures the names of all paper-submitting providers in order to convert them for other e-commerce~~OPERATIONS

13NWH, Inc. (“NWH” or the “Company”) owns and operates Electronic Network Systems, Inc. (“ENS”), a payer services organization that connects healthcare payers and providers using state of the art proprietary software and telecommunications services for most healthcare payment and insurance validation transactions. The Company focuses its efforts on the development of ENS’ business and continues its business of acquiring and disposing of interests in healthcare and other business areas that will enhance the operations of ENS.

~~services~~The ~~with~~Company ~~the~~was ~~payer’s support. Utilization~~incorporated ofin ~~Health-e~~Delaware ~~Networkâ~~under ~~(which~~the name ~~includes~~National ~~ADSÔ)~~Wireless ~~provides~~Holdings aInc. ~~payer~~on ~~with~~August 31, ~~the~~1993. ~~opportunity~~The toCompany’s ~~have~~fiscal ~~100%~~year ~~e-commerce~~ends ~~claims~~on ~~receipts.~~October ~~With~~31. ENS’ asfiscal ~~their~~year ~~partner~~ends ~~and~~on ~~core e-commerce strategy implementer, payers can increase e-commerce transactions from their provider constituency~~September 30.

~~• Pre-Adjudication~~ENS is ~~Software~~a ~~SystemÔ~~healthcare ~~(PASSÔ) provides~~payer aand ~~single~~provider services organization that connects payers (i.e., ~~HIPAA-compliant~~insurance ~~connectivity~~companies ~~entry~~and ~~point~~third toparty aadministrators) ~~payer~~and providers (i.e., ~~for~~doctors, ~~all~~group ~~claims~~practices ~~transactions,~~and ~~including~~other ~~transactions~~healthcare ~~received~~providers) ~~via~~using state of the ~~Internet,~~art ~~through~~proprietary ~~private~~software ~~e-commerce~~and ~~networks,~~telecommunications services for most healthcare payment and ~~received~~insurance onvalidation ~~paper~~transactions. ~~PASSä~~ENS ~~channels~~provides ~~the~~a ~~claims~~state byof ~~utilizing~~the ~~customized~~art ~~and~~technology ~~algorithm-based~~platform ~~logic,~~for ~~and~~web ~~conducts~~based ~~the~~graphical ~~vital~~user ~~claims~~interfaces ~~processing~~on ~~function~~a ofnational ~~provider~~basis, ~~and~~which ~~member~~enables ~~matching~~its clients, ~~including~~both ~~real-time~~payers ~~eligibility~~and ~~verification~~providers, ato comply fully ~~critical~~with ~~payer~~applicable ~~requirement~~regulatory ~~for~~requirements ~~increased~~such ~~claims~~as ~~paying~~those ~~accuracy~~imposed ~~and~~by ~~efficiency~~HIPAA. ENS’ service ~~PASSÔ~~offerings isaddress anthe ~~open,~~full ~~flexible~~array ~~solution~~of ~~that~~evolving isindustry ~~used~~needs in this focused area with ~~the~~a ~~vast~~complete ~~majority~~cycle of ~~today~~services from a single point of entry (a personal computer in the client’s ~~payer~~office) for both providers and payers, compatible with multiple system and database operating environments. These services include an Internet transactions portal, payer transactions hosting, electronic data interchange, pre-adjudication software services (PASStm), scanning, optical character recognition and data entry of paper claims and correspondence and mailroom services. ENS generates revenue through recurring subscriptions, flat or per transaction fees and revenue sharing.

• HIPAA Payer Portal and Hosting (Health-e XchangeÔ) ENS’ transactions infrastructure receives data from providers in virtually any file format and translates to any healthcare Payers’ file specifications, facilitating HIPAA transactions compliance. ENS delivers transactions compliance for Providers, Payers, and Application Service Providers. ENS provides compliance, connectivity, and routing on all HIPAA-defined administrative healthcare transactions with a participating Payer including: healthcare claims or encounter information; health plan eligibility; healthcare claim status; referral certification and authorization; healthcare payment and remittance advice; health plan enrollments; and health plan premium payments.11

Over 72,000 providers are connected to ENS’ e-commerce and Internet services which represents a 34% increase over the prior year primarily due to more connections with gateways. Through payer arrangements, ENS also ~~provides~~currently ~~transaction~~conducts ~~hosting~~daily paper to e-commerce claim conversion for another ~~Payers~~185,000 healthcare providers. ENS also experienced a 19% increase in socontracted ~~they~~billable ~~can~~provider ~~outsource~~sites ~~their~~over ~~transaction~~the ~~processing~~prior ~~needs~~year. All of ENS’ ~~transaction~~growth ~~hosting~~was obtained ~~capabilities~~through ~~provide for~~internal ~~compliance,~~sales ~~connectivity~~versus acquisition. As of May 30, ~~routing~~2006, ENS ~~and~~was ~~processing~~connected ofto ~~the~~over ~~transaction~~1,500 ~~for~~payers, including commercial healthcare plans, ~~the~~managed ~~Payer~~care onorganizations, ~~the~~Blue ~~following~~Cross/Blue ~~HIPAA-defined~~Shield ~~administrative~~plans, ~~healthcare~~Medicare, ~~transactions:~~Medicaid ~~health~~and ~~plan~~CHAMPUS. ~~eligibility;~~Approximately ~~healthcare~~90% ~~claim~~of ~~status;~~all ~~referral~~electronic ~~certification~~claims ~~and~~received by ENS are ~~authorization~~directly submitted to contracted payers.

~~• Real~~We ~~Time~~focus ~~Transaction~~on ~~Processing~~the current and future connectivity and transactions processing requirements of the healthcare industry. We provide healthcare providers with a secure infrastructure for ~~eligibility~~web-based and private network transactions consisting of, ~~claim~~among ~~status~~others, electronic medical claims processing, electronic claims tracking and ~~referrals~~patient iseligibility verification. We analso ~~ENS~~provide ~~service~~health ~~that~~care ~~provides~~payers ~~physician~~e-commerce ~~practices~~connectivity with ~~immediate~~their ~~access~~provider constituency as well as paper claims conversion, pre-adjudication, reporting, education and marketing support to ~~participating~~increase utilization of e-commerce in this ~~payers~~industry. ~~plus~~Our ~~various~~strategy ~~regional~~for the future is to facilitate the migration of provider and ~~governmental~~payer ~~payers~~clients ~~for~~from ~~determining~~their ~~member~~current inefficient, non-integrated ~~plan~~transactions ~~eligibility. This~~processing ~~service~~environments isto efficient, seamlessly integrated ~~delivered~~applications ~~over~~utilizing the transactions processing capabilities of Health-e Networkâ. Traditional applications linked to on-all-the-time Internet capabilities or Application Service Provider (ASP) environments will be able to route real-time transactions to and ~~receives~~from ~~constant~~all ~~updating~~payers utilizing Health-e Networkâ. We believe that the transition to these new levels of integrated transactions processing capabilities will drastically change how the business of healthcare is conducted among healthcare participants. We plan to continue to expand this transactions infrastructure as management believes these applications will continue to evolve into more viable and widely used systems.

~~• Electronic~~ENS ~~Claims~~Services ~~Tracking~~— ~~(ECTÔ) provides immediate Internet-based tracking of both e-commerce claims and, for those payers utilizing~~ Health-e Networkâ, up-dated status on the paper claims that have been converted to an e-commerce format. ENS believes that this is the first tool that affords providers the opportunity to utilize an Internet application to track claims forwarded to payers electronically.

~~• Direct~~ENS’ Health-~~Payer~~e Networkâ suite of services addresses all of the healthcare industry’s administrative transaction processing needs, both e-~~Commerce~~commerce and paper. As a provider of full-cycle payer and provider e-commerce services, ENS enhances the providers’ and payers’ administrative efficiency. The service offerings range from a front-end data capture/transmission software and simple mailroom services to advanced pre-adjudication software. ENS mailroom and data capture offerings are offered through strategic partnerships. ENS currently provides ~~network~~e-commerce connectivity to over 1,500 payers for the ~~HIPAA~~e-~~defined~~commerce ~~transactions~~claims tocomponent of Health-e Networkâ and ~~from~~provides ~~payer~~a ~~organizations~~growing ~~from~~number ~~existing~~of payers with connectivity for the entire suite ~~physicians~~of HIPAA-mandated administrative transactions between payers and ~~gateways~~providers.

~~• Customer~~Health-e ~~Service. As an~~Networkâ ~~adjunct~~includes tothe ~~its transaction processing services, we maintain customer service facilities with help desks for real-time customer inquiries. We offer on-line~~following:

14· Healthcare e-Commerce Transactions Processing ENS delivers multiple applications that enable healthcare providers to conduct key healthcare transactions easily with many payers. ENS provides these e-commerce applications through the Internet and on multiple operating systems. ENS also delivers transaction processing capabilities to strategic partners, such as physician management software vendors which, with their own software, access payers to conduct electronic business transactions via use of ENS’ Software Developer’s Kit (SDK). ENS currently processes and routes medical and hospital claims, eligibility requests and responses, claims status, claims tracking, claim payment remittance information, reporting, referral and authorization transactions. ENS services support all of the HIPAA-defined transactions and deliver to providers various methods of conducting those transactions with payers.

· Provider Connectivity (Xpedite™ ) enables ENS to identify the paper and ~~personal~~manual ~~technical~~transaction volumes of a payer’s provider groups, target ~~support~~high paper submitters, track internal progress, and market specifically to selected healthcare transaction submitters. ~~Client~~ ~~support~~Based ~~employs~~on apayer ~~modern~~specific criteria, ~~call~~ENS ~~tracking~~assigns different levels of internal resources to convert these providers to electronic business processes with the payer. The Xpediteä conversion program then goes beyond the sales process and ~~response~~combines ~~system~~efforts ~~that~~of all ENS internal departments. The purpose of Xpediteä is ~~directly~~to ~~connected~~connect providers on behalf of payer organizations to ~~the~~make ~~processing~~the ~~center~~participants more efficient through e-commerce.

As· Automated Document ServicesÔ (ADSÔ) provides payers the complete front-end handling and conversion (imaging/scanning) of ~~June 7,~~paper ~~2005,~~claims informs ~~excess~~to an e-commerce format. Paper claims now constitute from 25-30% of ~~54,000~~provider claims ~~physicians~~volume industry-wide to commercial payers. As the claims are converted ~~were~~to ~~actively~~an electronic format, ENS or an ENS partner captures the names of all paper-submitting ~~electronic~~providers ~~healthcare~~in ~~transactions~~order ~~via~~to convert them for other e-commerce services with the payer’s support. Utilization of Health-e Networkâ (which ~~suite~~includes ofADSÔ) ~~services~~provides a payer with anthe ~~additional~~opportunity ~~227~~to ~~contracted~~have 100% e-commerce claims receipts. With ENS as their partner and core e-commerce strategy implementer, payers can increase e-commerce transactions from their provider ~~sites~~constituency. ~~scheduled~~With tothe becontinually decreasing ~~installed~~number of paper claim transactions received by payers, and the ~~during~~reduced pricing and margins in paper conversion services across the ~~remainder~~industry, ENS utilizes the services of ~~calendar~~business ~~2005~~partners to process paper transactions in order to improve efficiencies and profitability. We are strategically focused on our higher margin core electronic transaction services and will continue to enhance our service offerings. ENS will continue to support its proven complete cycle model through strategic business partners wherever it is financially and strategically prudent.

In· Pre-Adjudication ~~addition~~Software SystemÔ (PASSÔ) provides a single, HIPAA-compliant connectivity entry point to ~~ENS~~a payer for all claims transactions, including transactions received via the ~~Company~~Internet, ~~may~~through ~~continue~~private toe-commerce ~~seek~~networks, ~~acquisitions~~and inreceived ~~telecommunications~~on paper. PASSä channels the claims by utilizing customized and algorithm-based logic, ~~healthcare~~and conducts the vital claims processing function of provider and ~~other~~member ~~strategically~~matching, ~~linked~~including ~~areas~~real-time eligibility verification, a critical payer requirement for increased claims paying accuracy and efficiency. ~~The~~ ~~Company~~ENS’ ~~may~~PASSÔ is ~~acquire~~an oropen, ~~invest~~flexible solution that is used with the vast majority of today’s inpayer ~~other~~operating ~~businesses~~environments.

~~Forward~~· HIPAA Payer Portal and Hosting (Health-~~Looking~~e ~~Statements~~XchangeÔ) ENS’ transactions infrastructure receives data from providers in virtually any file format and translates to any healthcare Payers’ file specifications, facilitating HIPAA transactions compliance. ENS delivers transactions compliance for Providers, Payers, and Application Service Providers. ENS provides compliance, connectivity, and routing on all HIPAA-defined administrative healthcare transactions with a participating Payer including: healthcare claims or encounter information; health plan eligibility; healthcare claim status; referral certification and authorization; healthcare payment and remittance advice; health plan enrollments; and health plan premium payments.

Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company’s financial and business prospects and capital requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the limited nature of the Company’s operations and the risk of the Company’s failure to acquire additional businesses; the uncertain acceptance of Health-e Networkâ; competition; existing government regulations and changes in, or the failure to comply with, government regulations; the ability of the Company to sustain, manage or forecast its growth; dependence on significant customers and the potential loss thereof; the ability to attract and retain qualified personnel; risk of technological obsolescence, and other factors referenced in this Quarterly Report on Form 10-Q including, without limitation, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Certain of these factors are discussed in more detail in the Company’s Annual Report on Form 10-K for the year ended October 31, 2004, including, without limitation, under the caption “Business” and Exhibit 99.1 thereto. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.12

~~Results~~ENS also provides transaction hosting for Payers so they can outsource their transaction processing needs. ENS’ transaction hosting capabilities provide for compliance, connectivity, routing, and processing of ~~Operations~~the transaction for the Payer on the following HIPAA-defined administrative healthcare transactions: health plan eligibility; healthcare claim status; referral certification and authorization.

~~Six~~· Eligibility ~~months~~is ~~ended~~an ~~April 30,~~ENS ~~2005~~service asthat ~~compared~~provides physician practices with immediate access to participating payers plus various regional ~~six~~and ~~months~~governmental ~~ended~~payers ~~April 30,~~for ~~2004:~~determining member plan eligibility. This service is delivered over the Internet and receives constant updating.

~~Services~~· Electronic ~~Revenue:~~Claims Tracking (ECTÔ) provides immediate Internet-based tracking of both e-commerce claims and, for those payers utilizing Health-e Networkâ, up-dated status on the paper claims that have been converted to an e-commerce format. ENS believes that this is the first tool that affords providers the opportunity to utilize an Internet application to track claims forwarded to payers electronically.

~~Services~~· Direct-Payer ~~revenue~~e-Commerce ~~increased~~provides ~~from~~network ~~$8,559,746~~connectivity for ~~the six~~ ~~months~~HIPAA-defined ~~ended~~transactions ~~April 30, 2004~~ to ~~$9,418,088~~and ~~for~~from ~~the~~payer ~~six~~organizations ~~months~~from ~~ended April 30,~~existing ~~2005~~physicians ~~(approximately~~and ~~10%), reflecting ENS’ increased sales~~gateways. ~~See below for a discussion of ENS results of operations.~~

15· Customer Service. As an adjunct to its transaction processing services, we maintain customer service facilities with help desks for real-time customer inquiries. We offer on-line and personal technical support. Client support employs a modern call tracking and response system that is directly connected to the processing center.

~~Cost~~As of ~~Services:~~May 30, 2006, in excess of 72,000 physicians were actively submitting electronic healthcare transactions via Health-e Networkâ suite of services with over an additional 532 contracted provider sites scheduled to be installed in 2006.

~~Cost~~Forward-Looking of services increased from $4,494,783 for the six months ended April 30, 2004 to $4,600,800 for the six months ended April 30, 2005 (approximately 2%), reflecting costs related to increased sales at ENS. See below for a discussion of ENS’ results of operations.Statements

~~Professional~~Certain ~~Fees~~statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company’s financial and business prospects and capital requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the limited nature of the Company’s operations and the risk of the Company’s failure to acquire additional businesses; the uncertain acceptance of Health-e Networkâ; competition; existing government regulations and changes in, or the failure to comply with, government regulations; the ability of the Company to sustain, manage or forecast its growth; dependence on significant customers and the potential loss thereof; the ability to attract and retain qualified personnel; risk of technological obsolescence, and other factors referenced in this Quarterly Report on Form 10-Q including, without limitation, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Certain of these factors are discussed in more detail in the Company’s Annual Report on Form 10-K for the year ended October 31, 2005, including, without limitation, under the caption “Business” and Exhibit 99.1 thereto. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

~~Professional~~Results ~~fees increased from $397,530 in the six months ended April 30, 2004 to $579,666 in the six months ended April 30, 2005 (approximately 46%) as a result~~ of arbitration proceedings with a major customer over additional business opportunities and review of our other potential legal claims against third parties. The professional fees relating to the Company independent of ENS’ business increased from $327,731 in the six months ended April 30, 2004 to $391,966 in the six months ended April 30, 2005, reflecting higher levels of transaction activity.Operations

~~General~~Three ~~and~~months ~~Administrative~~ended April 30, 2006 as compared to three months ended April 30, 2005:

~~General~~Service and administrative expense increased from $3,655,743 in the six months ended April 30, 2004 to $4,197,813 in the six months ended Apri1 30, 2005 (approximately15%), reflecting business growth in EDI transactions with providers and payers. The general and administrative expenses relating to the operations of the Company, independent of ENS’ business, increased from $660,170 in the six months ended April 30, 2004 to $752,093 in the six months ended April 30, 2005.Revenue:

~~Depreciation~~Service revenue increased from $4,770,308 for the three months ended April 30, 2005 to $4,919,738 for the three months ended April 30, 2006 (or approximately 3.1%), primarily reflecting growth in sales to new and ~~Amortization:~~existing providers and related payer income as well as growth in PASSTM transactions. ENS has increased its number of direct provider connections by 20.7% and increased its number of direct e-commerce connections with payers from March 31, 2005 to March 31, 2006. These trends were offset by market wide pricing pressures on payer income from EDI transactions and declining claim volumes from a significant customer (see ENS — Liquidity and Capital Resources for a discussion of this customer). This significant customer makes up approximately 99% of the Company’s revenue in the area of processing paper claim transactions. With the continually decreasing number of paper claim transactions received by payers, and the reduced pricing and margins in paper conversion services across the industry, ENS utilizes the services of business partners to process paper transactions in order to improve efficiencies and profitability and does not endeavor to grow this aspect of ENS’ business. We remain strategically focused on growing our higher margin core electronic transaction services and will continue to enhance our service offerings in this area. ENS will continue to support its proven complete cycle model through strategic business partners wherever it is financially and strategically prudent. See below for a discussion of ENS results of operations.

~~Depreciation~~Cost ~~and amortization increased from $142,566 in the six months ended April 30, 2004 to $176,803 in the six months ended April 30, 2005, primarily due to the amortization~~ of ~~additional software development projects.~~Services:

~~Loss~~Cost of services increased from ~~Operations:~~$2,255,419 in the three months ended April 30, 2005 to $2,364,904 in the three months ended April 30, 2006 (or approximately 4.9%). Included in cost of services for the three months ended April 30, 2005 and April 30, 2006 is amortization of proprietary software used to provide services directly to specific customers, and depreciation of furniture and equipment, of $339,313 and $430,833, respectively (an increase of approximately 27.0%). Cost of sales exclusive of depreciation and amortization increased approximately 0.9% reflecting a 2.9% increase in wages capitalized to software development due to an increase in signed contracts requiring development, declining costs related to declining transaction volumes from a significant customer offset by increased revenue sharing costs for EDI transaction processing.

~~As a result of the foregoing events, loss from operations increased from a loss of ($130,876) in the six months ended April 30, 2004 to a loss of ($136,994) in the six months ended April 30, 2005.~~13

~~Gain~~Professional ~~on Securities Transactions, Net~~Fees:

WeAggregate ~~realized~~professional fees adecreased ~~net~~from ~~gain~~$253,410 onin ~~securities transactions for~~ the ~~six~~three months ended April 30, ~~2004~~2005 of to $~~558~~198,~~458~~700 asin ~~compared to no net gain or loss for~~ the ~~six~~three months ended April 30, ~~2005,~~2006 as(or weapproximately ~~had already disposed of our remaining holdings of BellSouth common~~21.6%) ~~stock~~due ~~prior~~ to the ~~start~~resolution of ~~fiscal~~the ~~2005~~arbitration proceedings. ~~Under~~ ~~Financial~~The ~~Accounting~~professional ~~Standards Board Statement No. 133 “Accounting~~fees ~~for~~relating ~~Derivative Instruments and Hedging Activities,” unrealized gains and losses related~~ to ~~written call options and short sales are recorded in~~ the ~~Statement of Income. Further~~Company, ~~unrealized~~independent ~~gains~~of ~~and~~ENS’ ~~losses on BellSouth common stock~~business, ~~are recorded through Other Comprehensive (Loss) Income and are only recorded in the Statement of Income when realized upon ultimate sale. The realized and unrealized gain on derivative transactions~~ decreased from ~~a loss of (~~$~~209~~156,~~497)~~710 in ~~for~~ the ~~six~~three months ended April 30, ~~2004~~2005 to no$107,050 ~~gain~~in ~~or loss for~~ the ~~six~~three months ended April 30, ~~2005. The~~2006 ~~unrealized~~(or ~~loss~~approximately ~~on Bell South common stock~~31.7%), ~~reflected~~as ina ~~Other Comprehensive~~result ~~Income, net~~ of ~~income~~reduced ~~taxes, for the six months ended April 30,~~fees ~~2004~~due ~~was ($407,978) as compared~~ to nouse ~~gain~~of orinternal ~~loss~~staff ~~for~~to ~~the~~reduce ~~six~~external ~~months~~accounting ~~ended~~and ~~April 30, 2005~~legal services.

16Selling, General and Administrative:

~~Interest~~Selling, general and administrative ~~Dividend~~expense ~~Income:~~decreased from $2,139,293 in the three months ended April 30, 2005 to $1,942,697 in the three months ended April 30, 2006 (or approximately 9.2%), as a result of lower office and equipment rental costs, decreased postage costs related to lower volumes of claims mailed for third parties and other cost containment measures. The selling, general and administrative expense relating to operations of the Company, independent of ENS’ business, decreased from $406,444 in the three months ended April 30, 2005 to $358,310 in the three months ended April 30, 2006 (or approximately 11.8%) due to cost containment initiatives.

~~Interest~~Depreciation ~~income increased from $134,920 for the six months ended April 30, 2004 to $153,671 for the six months ended April 30, 2005, primarily as a result of higher interest rates~~ and changes in cash levels and our investment in treasury bills with the proceeds of the disposition of our remaining Bell South common stock. Dividend income increased from $124,571 for the six months ended April 30, 2004 to $137,551 for the six months ended April 30, 2005, due to our investment in various preferred index funds during 2005 as compared to the dividends received from Bell South common stock in 2004.Amortization:

~~Interest~~Depreciation ~~Expense:~~and amortization increased from $89,594 in the three months ended April 30, 2005 to $92,258 in the three months ended April 30, 2006 (or approximately 3.0%), due to the addition of internally used computer equipment.

~~Interest~~Income ~~expense decreased~~ from ~~$23,999 in the six months ended April 30, 2004 to $6,766 in the six months ended April 30, 2005, primarily due to a decrease in the average amount of debt and capital lease balances outstanding.~~Operations:

~~Other~~As ~~Income~~a ~~(Expense):~~result of the foregoing events, income from operations increased from $32,592 for the three months ended April 30, 2005 to $316,993 for the three months ended April 30, 2006.

WeInterest realized $793,950 of other income during the six months ended April 30, 2004, which was primarily attributable to our gain on securities transactions, net, while during the six months ended April 30, 2005, we realized other income of $284,456, reflecting our interest income and ~~dividend~~Dividend ~~income, net of interest expense.~~Income:

~~Income~~Interest ~~Before~~income decreased ~~Provision~~from $34,015 for the three months ended April 30, 2005 to $21,795 for the three months ended April 30, 2006 (~~Benefit~~or approximately 35.9%) and ~~for~~dividend ~~Income~~income ~~Taxes:~~increased from $137,551 in the three months ended April 30, 2005 to $198,110 in the three months ended April 30, 2006 (or approximately 44.0%), due to our investment in various preferred index funds during 2006 which generate dividends versus interest income.

WeInterest realized income before provision for income taxes of $663,074 for the six months ended April 30, 2004, primarily as a result of losses on options and gains on sales of Bell South stock, while for the six months ended April 30, 2005, the income before provision for income taxes decreased to $147,462. These results are primarily attributable to higher interest rates and because there were no securities transactions in 2005.Expense:

~~Provision~~Interest expense decreased from $3,093 in the three months ended April 30, 2005 to $1,036 in the three months ended April 30, 2006 (~~Benefit~~or approximately 66.5%), primarily ~~for~~due ~~Income~~to ~~Taxes:~~ENS’ repayment of all capital leases.

~~The~~Income ~~provision~~Before ~~for~~Provision ~~income taxes was $250,000~~ for ~~the~~Income six months ended April 30, 2004, as compared to a benefit of $164,000 for the six months ended April 30, 2005. The benefit for income taxes for the six months ending April 30, 2005 includes primarily the revision of a prior year tax estimate of $206,000.Taxes:

~~Net~~ Income: before provision for income taxes increased from $201,065 for the three months ended April 30, 2005 to $535,861 for the three months ended April 30, 2006, primarily as a result of the increase in income from operations and increases in dividend and interest income, as described above.

~~Net~~Provision ~~income~~(Benefit) ~~decreased from $413,074~~ for ~~the~~Income ~~six months ended April 30, 2004 to $311,462 for the six months ended April 30, 2005 as a result of the foregoing events.~~Taxes:

~~Three~~Provision for income taxes was $74,000 for the three months ended April 30, 2005, as compared to a benefit of $410,427 for the three months ended April 30, ~~2004:~~2006, which reflected the utilization of federal net operating loss carryforwards of $428,000 and the revision of prior year tax estimates of $111,000.

~~Services~~Net ~~Revenue~~Income:

~~Services~~Net income ~~revenue~~ increased from $4127,~~373,436~~065 for the three months ended April 30, ~~2004~~ 2005 to $4946,~~770,308~~288 for the three months ended April 30, ~~2005~~ ~~(approximately 9%)~~2006, ~~reflecting~~as ~~ENS’ increased sales. See below for~~ a ~~discussion~~result of ~~ENS results of~~the ~~operations~~foregoing events.

17Six months ended April 30, 2006 as compared to six months ended April 30, 2005:

~~Cost~~Service ~~of Services~~Revenue:

~~Cost~~Service revenue ofincreased ~~services decreased~~ from $29,~~350~~418,~~541~~088 for the ~~three~~six months ended April 30, ~~2004~~ 2005 to $29,~~255~~559,~~419~~964 for the ~~three~~six months ended April 30, ~~2005~~2006 (~~approximately~~or 4approximately 1.5%), ~~due~~primarily reflecting growth in sales to ~~additional~~new and existing providers and ~~labor~~related ~~being~~payer ~~capitalized~~income ~~for~~as ~~software~~well ~~development~~as ~~projects~~growth in PASSTM transactions. ~~See~~ ~~below~~ENS has increased its number of direct provider connections by 20.7% and increased its number of direct e-commerce connections with payers from March 31, 2005 to March 31, 2006. These trends were offset by market wide pricing pressures on payer income from EDI transactions and declining claim volumes from a significant customer (see ENS — Liquidity and Capital Resources for a discussion of ~~ENS’~~this ~~results~~customer). This significant customer makes up approximately 99% of the Company’s revenue in the ~~operations~~area of processing paper claim transactions. With the continually decreasing number of paper claim transactions received by payers, and the reduced pricing and margins in paper conversion services across the industry, ENS utilizes the services of business partners to

~~Professional Fees:~~14

~~Professional~~process paper ~~fees~~transactions ~~increased~~in ~~from~~order ~~$179,002~~to inimprove ~~the~~efficiencies ~~three~~and ~~months~~profitability ~~ended~~and ~~April 30,~~does ~~2004~~not endeavor to ~~$253,410~~grow inthis ~~the~~aspect ~~three~~of ~~months~~ENS’ ~~ended~~business. ~~April 30,~~We ~~2005~~remain ~~(approximately 42%)~~strategically asfocused aon ~~result~~growing ofour ~~arbitration~~higher ~~proceedings~~margin ~~with~~core aelectronic ~~major~~transaction ~~customer~~services ~~over additional~~and ~~business~~will ~~opportunities~~continue ~~and~~to ~~review~~enhance of our ~~other~~service ~~potential~~offerings ~~legal~~in ~~claims~~this ~~against third parties~~area. ~~The~~ ~~professional~~ENS ~~fees relating~~will continue to ~~the~~support ~~Company~~its ~~independent~~proven ofcomplete ~~ENS’~~cycle ~~business~~model ~~increased~~through ~~from~~strategic ~~$143,902~~business inpartners ~~the~~wherever ~~three~~it ~~months~~is ~~ended~~financially ~~April 30,~~and ~~2004~~strategically toprudent. ~~$156,710~~See inbelow ~~the~~for ~~three months~~a ~~ended~~discussion ~~April 30,~~of ~~2005,~~ENS ~~reflecting~~results ~~higher levels~~ of ~~transaction activity~~operations.

~~General~~Other ~~and Administrative~~Income:

~~General~~The ~~and~~Company’s ~~administrative~~arbitration with ~~expense~~a ~~increased~~major ~~from~~customer ~~$1,768,549~~over inadditional ~~the~~business ~~three months~~opportunities ~~ended~~was ~~April 30,~~resolved ~~2004~~with an toaward of $21,~~139~~000,~~293~~757 into ~~the three months ended April 30~~ENS, ~~2005~~ ~~(approximately~~which ~~21%), reflecting~~was ~~business~~paid ~~growth~~ in ~~EDI~~August, ~~transactions with providers and payers~~2005. ~~The~~ ~~general~~During ~~and administrative expenses~~the ~~relating~~quarter toended ~~the~~January 31, ~~operations of the Company~~2006, ~~independent~~ENS ofreceived ~~ENS’~~an ~~business,~~additional ~~increased from~~award of $~~341~~262,~~235~~729 inrepresenting ~~the~~recovery ~~three~~of ~~months~~a ~~ended~~portion ~~April 30,~~of ~~2004 to $406,444 in~~ the ~~three months~~related ~~ended~~legal ~~April 30, 2005~~costs.

~~Depreciation~~Cost ~~and~~of ~~Amortization~~Services:

~~Depreciation~~Cost ~~and amortization~~of services increased from $764,~~352~~600,800 in the ~~three~~six months ended April 30, ~~2004~~ to2005 to $894,~~594~~636,485 in the ~~three~~six months ended April 30, 2006 (or approximately 0.8%). Included in cost of services for the six months ended April 30, 2005 and April 30, 2006 ~~primarily~~is ~~due~~amortization of proprietary software used to provide services directly ~~the~~to ~~amortization~~specific customers, and depreciation of ~~additional~~furniture and equipment, of $658,629 and $852,355, respectively (an increase of approximately 29.4%). Cost of sales exclusive of depreciation and amortization decreased approximately 4.0% reflecting a 22.8% increase in wages capitalized to software development ~~projects~~due to an increase in signed contracts requiring development, declining costs related to declining transaction volumes from a significant customer offset by increased revenue sharing costs for EDI transaction processing.

~~Income~~Professional ~~(Loss) from Operations~~Fees:

AsAggregate aprofessional fees ~~result~~decreased offrom ~~the foregoing events~~$579,666 ~~income~~in ~~from~~the ~~operations~~six ~~increased from~~months aended ~~loss~~April 30, of2005 (to $1344,~~008)~~380 in the ~~three~~six months ended April 30, ~~2004~~2006 (or approximately 40.6%) due to ~~income~~the resolution of the arbitration proceedings. The professional fees relating to the Company, independent of ~~$32~~ENS’ business,~~592~~ decreased from $391,966 in the ~~three~~six months ended April 30, 2005 to $170,680 in the six months ended April 30, 2006 (or approximately 56.5%), as a result of reduced fees due to use of internal staff to reduce external accounting and legal services.

~~Gain~~Selling, ~~(Loss)~~General ~~on Securities~~and ~~Transactions, Net~~Administrative:

WeSelling, ~~realized~~general aand administrative ~~gain~~expense ondecreased ~~securities~~from ~~transactions~~$4,179,813 ~~for~~in the ~~three~~six months ended April 30, 2005 ~~2004~~to of $~~738~~4,~~015~~030,739 asin ~~compared to no net gain or loss for~~ the ~~three~~ six months ended April 30, ~~2005,~~2006 ~~as we had already disposed of our remaining holdings of BellSouth common~~(or ~~stock~~approximately ~~prior~~4.0%), toas ~~the~~a ~~start~~result of ~~fiscal~~lower ~~2005. Under~~office ~~Financial~~and ~~Accounting~~equipment ~~Standards~~rental ~~Board Statement No. 133 “Accounting~~costs, ~~for~~decreased ~~Derivative~~postage ~~Instruments~~costs ~~and Hedging Activities,” unrealized gains and losses~~ related to ~~written~~lower ~~call~~volumes ~~options~~of ~~and~~claims ~~short sales~~mailed ~~are~~for ~~recorded in the Statement of Income.~~ third ~~Further,~~parties ~~unrealized gains~~ and ~~losses~~other oncost ~~BellSouth~~containment ~~common~~measures. The ~~stock~~selling, ~~are recorded~~general ~~through Other Comprehensive (Loss) Income~~ and ~~are~~administrative expense ~~only~~relating ~~recorded~~to inoperations ~~the Statement~~ of ~~Income~~the ~~when~~Company, ~~realized~~independent ~~upon~~of ~~ultimate~~ENS’ ~~sale. The realized and~~business, ~~unrealized gain on derivative transactions~~ decreased from ~~a gain of~~ $~~738~~752,~~015~~093 ~~for~~in the ~~three~~six months ended April 30, ~~2004~~2005 to no$709,054 in ~~gain or loss for~~ the ~~three~~six months ended April 30, 2006 (or approximately 5.7%) due to ~~2005~~general cost containment initiatives.

18Depreciation and Amortization:

~~The~~Depreciation ~~unrealized~~and amortization ~~loss~~increased onfrom ~~Bell South common stock~~$176,803 ~~reflected~~ in ~~Other Comprehensive~~the ~~Income,~~six ~~net~~months ofended ~~income~~April 30, 2005 ~~taxes~~to $184,823 ~~for~~in the ~~three~~six months ended April 30, ~~2004~~ ~~was~~2006 a(or ~~loss of~~approximately ~~($505,566~~4.5%), asdue ~~compared~~ to nothe ~~gain~~addition orof ~~loss~~internally ~~for~~used ~~the~~computer ~~three~~equipment ~~months~~and ~~ended April 30,~~office ~~2005~~furniture.

~~Interest~~Income ~~and~~(Loss) ~~Dividend~~from ~~Income~~Operations:

~~Interest~~As ~~income~~a ~~decreased~~result ~~from~~of ~~$65,105 for~~ the ~~three months ended April 30,~~ ~~2004~~foregoing ~~to $34~~events,~~015~~ ~~for~~income ~~the~~(loss) ~~three~~from ~~months~~operations ~~ended~~increased ~~April 30,~~from ~~2005, primarily as~~ a ~~result~~ ofloss ~~liquidating our investment in~~of ~~treasury bills in 2005. Dividend income increased from~~ $56136,~~035~~994 for the ~~three~~six months ended April 30, ~~2004~~2005 to income of $~~137~~617,~~551~~893 for ~~the~~ ~~three~~the six months ended April 30, ~~2005, due to our investment in various preferred index funds during 2005 as compared to the dividends received from Bell South common stock in 2004~~2006.

Interest ~~Expense~~and Dividend Income:

Interest ~~expense decreased~~income decreased from $7153,~~587~~671 infor the ~~three~~six months ended April 30, ~~2004~~2005 to $362,~~093~~401 for the six months ended April 30, 2006 (or approximately 59.4%) and dividend income increased from $137,551 in the ~~three~~ six months ended April 30, 2005 to $395,714 ~~primarily~~in the six months ended April 30, 2006 (or approximately 187.7%), due to aour ~~decrease~~investment in ~~the~~various ~~average amount~~preferred ofindex ~~debt~~funds ~~and~~during ~~capital~~2006 which ~~lease~~generate ~~balances~~dividends ~~outstanding~~versus interest income.

~~Other~~Interest ~~Income (~~Expense):

WeInterest ~~realized~~expense decreased from $~~851~~6,~~568~~766 ~~of other~~in ~~income during~~ the ~~three~~six months ended April 30, ~~2004,~~2005 ~~which was primarily attributable~~ to ~~our gain on securities transactions~~$2,203 ~~net, while during~~ in the ~~three~~ six months ended April 30, ~~2005,~~2006 we(or ~~realized~~approximately ~~other income of $168~~67.4%),~~473,~~ primarily ~~reflecting~~due ~~our~~to ~~dividend~~ENS’ ~~income~~repayment ~~and interest income, net~~ of ~~interest~~all ~~expense~~capital leases.

Income Before Provision ~~(Benefit)~~ for Income Taxes:

WeIncome ~~realized income~~ before provision ~~(benefit)~~ for income taxes of increased from $~~850~~147,~~560~~462 for the ~~three~~six months ended April 30, ~~2004~~ 2005, ~~primarily~~to ~~as a result of losses/gains on options and short positions and sales of Bell South stock~~$1,073,932 ~~while~~ for the ~~three~~six months ended April 30, ~~2005~~2006, ~~the~~primarily ~~income before provision (benefit)~~as ~~for~~a ~~income~~result ~~taxes~~of ~~decreased~~the toincrease ~~$201,065. These~~in ~~results~~income ~~are~~from ~~primarily~~operations ~~attributable~~and toincreases ~~higher~~in ~~interest rates and~~dividend ~~because~~and ~~there~~interest ~~were~~income, noas ~~security~~described ~~transactions in 2005~~above.

~~Provision (Benefit) for Income Taxes:~~15

~~The~~Provision ~~provision~~(Benefit) for ~~income~~Income ~~taxes was $321,000 for the three months ended April 30, 2004, as compared to $74,000 for the three months ended April 30, 2005.~~Taxes:

~~Net~~Benefit ~~Income:~~for income taxes was $164,000 for the six months ended April 30, 2005 as compared to $193,311 for the six months ended April 30, 2006 which reflected the utilization of federal net operating loss carryforwards of $428,000.and the revision of prior year tax estimates of $111,000 and the prior quarter tax estimates of $44,000.

Net ~~income decreased from $529,560 for the three months ended April 30, 2004 to $127,065 for the three months ended April 30, 2005 as a result of the foregoing events.~~Income:

~~ENS—Results~~Net income increased from $311,462 for the six months ended April 30, 2005 to $1,267,243 for the six months ended April 30, 2006, as a result of ~~Operations:~~the foregoing events.

ENS—Results -of ~~Six months ended March 31, 2005 as compared to six months ended March 31, 2004~~Operations:

~~Services~~ENS ~~Revenue~~- Three months ended March 31, 2006 as compared to three months ended March 31, 2005:

~~Services~~Service revenue increased from $8,559,746 in the six months ended March 31, 2004 to $9,418,088 in the six months ended March 31, 2005 (approximately 10%), primarily due to growth in sales to providers and related payer income.Revenue:

19Service revenue increased from $4,770,308 for the three months ended March 31, 2005 to $4,919,738 for the three months ended March 31, 2006 (or approximately 3.1%), primarily reflecting growth in sales to new and existing providers and related payer income as well as growth in PASSTM transactions. ENS has increased its number of direct provider connections by 20.7% and increased its number of direct e-commerce connections with payers from March 31, 2005 to March 31, 2006. These trends were offset by market wide pricing pressures on payer income from EDI transactions and declining claim volumes from a significant customer (see ENS — Liquidity and Capital Resources for a discussion of this customer). This significant customer makes up approximately 99% of the Company’s revenue in the area of processing paper claim transactions. With the continually decreasing number of paper claim transactions received by payers, and the reduced pricing and margins in paper conversion services across the industry, ENS utilizes the services of business partners to process paper transactions in order to improve efficiencies and profitability and does not endeavor to grow this aspect of ENS’ business. We remain strategically focused on growing our higher margin core electronic transaction services and will continue to enhance our service offerings in this area. ENS will continue to support its proven complete cycle model through strategic business partners wherever it is financially and strategically prudent.

Cost of Services:

Cost of services increased from $42,~~493~~255,~~091~~419 in the ~~six~~three months ended March 31, ~~2004~~2005 to $42,~~600~~364,~~800~~904 in the ~~six~~three months ended March 31, ~~2005~~2006 (~~approximately~~or 2approximately 4.9%)~~, reflecting costs related to increased sales to providers and related payer income which was offset by additional labor being capitalized for software development projects and lower benefit costs~~. Included in cost of services for the ~~six~~three months ended March 31, ~~2004~~ 2005 and March 31, ~~2005~~2006 is amortization of proprietary software ~~costs~~used to provide services directly to specific customers, and depreciation of furniture and equipment, of $~~628~~339,~~058~~313 and $~~658~~430,~~629~~833, respectively (an increase of approximately 27.0%). Cost of sales exclusive of depreciation and amortization increased approximately 0.9% reflecting a 2.9% increase in wages capitalized to software development due to an increase in signed contracts requiring development, declining costs related to declining transaction volumes from a significant customer offset by increased revenue sharing costs for EDI transaction processing.

Professional Fees:

Professional fees ~~increased~~decreased from $6996,~~800~~700 in the ~~six~~three months ended March 31, ~~2004~~2005 to $~~187~~91,~~700~~650 in the ~~six~~three months ended March 31, ~~2005~~2006 (or approximately ~~169~~5.2%) as a result of the completion of the arbitration proceedings ~~with~~against a major customer. ~~over~~See ~~additional~~Other ~~business~~Income for a further discussion of the arbitration award ~~opportunities~~received by ENS.

Selling, General and Administrative:

~~General~~Selling, ~~and~~general and administrative expense ~~increased~~decreased from $21,~~084~~829,~~402~~550 in the ~~six~~three months ended March 31, ~~2004~~2005 to $21,~~271~~676,~~441~~038 in the ~~six~~three months ended March 31, ~~2005~~2006 (or approximately 98.4%) ~~reflecting~~ ~~business~~as ~~growth~~a inresult ~~EDI~~of ~~transactions~~lower ~~with~~office ~~providers~~ and ~~payers~~equipment ~~and~~rental costs, ~~increased~~decreased ~~legal~~postage ~~fees~~costs ~~from~~related ~~arbitration~~to ~~proceedings. This~~lower ~~amount~~volumes ~~excludes~~of ~~selling~~claims ~~and~~mailed ~~advertising~~for third inparties ~~the~~and ~~amount~~other ofcost ~~$982,663~~containment ~~and~~measures. ~~$1,361,979,~~These ~~and~~amounts ~~includes~~include professional fees ofas ~~$69,800 and~~noted ~~$187,700, for the six months ended March 31, 2004 and 2005, respectively~~above.

Depreciation and Amortization:

Depreciation and amortization increased from $~~142~~85,~~066~~653 in the ~~six~~three months ended March 31, ~~2004~~ 2005 to $~~170~~88,~~054~~767 in the ~~six~~three months ended March 31, ~~2005~~2006 (~~approximately~~or 20approximately 3.6%), ~~primarily~~ due to ~~amortization~~the purchase of additional ~~software~~computer ~~development projects~~equipment.

Income from Operations:

As a result of the foregoing ~~events~~and the following, income from operations increased from $~~857~~599,~~524~~687 in for the ~~six~~ three months ended March 31, ~~2004~~2005 (12.6% of revenue) to $1790,~~013,814~~030 (16.1% inof revenue) for the ~~six~~three months ended March 31, ~~2005. We~~ ~~believe ENS will continue profitable operations throughout 2005~~2006.

Interest Expense:

Interest expense, exclusive of interest payable to NWH, decreased from $163,~~616~~093 in the three ~~six~~ months ended March 31, ~~2004~~2005 to $61,~~565~~036 ~~(approximately 60%)~~ in the ~~six~~three months ended March 31, 2006 ~~2005~~(or approximately 66.5%), primarily due to aENS’ ~~decrease~~repayment inof ~~the~~all ~~average debt and~~ capital leases ~~lease~~in ~~balances~~fiscal ~~outstanding during the six months ended March 31,~~ 2005. For the ~~six~~three months ended March 31, ~~2004 and March 31~~2006, ~~2005,~~ $~~161~~22,~~418~~384 of ~~and~~interest ~~$120,740~~expense ~~respectively,~~was ofrecognized ~~interest expensed~~ by ENS as payable to ~~the~~NWH ~~Company~~and was eliminated in consolidation.

~~EBITDA:~~16

~~EBITDA~~Segment increased from $1,627,648 for the six months ended March 31, 2004 to $1,842,497 for the six months ended March 31, 2005, primarily as a result of increased business levels. We provide EBITDA (earnings before interest, taxes, depreciation and amortization) information as a guide to the operating performance of ENS. EBITDA, which is not a term recognized under generally accepted accounting principles, is calculated as the net income plus net interest,Income:

20Segment income increased from $1,024,653 for the three months ended March 31, 2005 to $1,309,630 for the three months ended March 31, 2006 (or approximately 27.8%) primarily as a result of the increase in services revenues, overall gain from operations and cost containment measures. We calculate segment income as income before income taxes excluding interest, depreciation and amortization. See Note 6 to the Consolidated Financial Statements for a presentation of segment income.

~~income~~ENS ~~taxes~~- ~~(benefit),~~Six ~~depreciation~~months ~~and~~ended ~~amortization.~~March 31, ~~Included~~2006 ~~in depreciation and amortization for the purpose of calculating EBITDA is depreciation of equipment and amortization of software costs. EBITDA~~ as ~~calculated~~compared ~~by the Company may not~~to besix ~~comparable~~months toended ~~calculations~~March 31, ~~of similarly titled items reported by other companies.~~2005:

~~Interest~~Service receivable by the Company from ENS was $8,754 at April 30, 2005, for a total outstanding loan to the Company of $5,147,739, including accrued interest. During the quarters ending January 31, 2005 and April 30, 2005, $700,000 and $600,000, respectively, of the amount owed by ENS to the Company under these loans was paid. These payments are reflected in the total outstanding loan as of April 30, 2005. The outstanding balance under this loan agreement including interest has been eliminated from the consolidated Financial Statements.Revenue:

~~ENS~~Service -revenue ~~Three~~increased from $9,418,088 for the six months ended March 31, 2005 ~~as compared~~ to ~~three~~$9,559,964 for the six months ended March 31, ~~2004:~~2006 (or approximately 1.5%), primarily reflecting growth in sales to new and existing providers and related payer income as well as growth in PASSTM transactions. ENS has increased its number of direct provider connections by 20.7% and increased its number of direct e-commerce connections with payers from March 31, 2005 to March 31, 2006. These trends were offset by market wide pricing pressures on payer income from EDI transactions and declining claim volumes from a significant customer (see ENS — Liquidity and Capital Resources for a discussion of this customer). This significant customer makes up approximately 99% of the Company’s revenue in the area of processing paper claim transactions. With the continually decreasing number of paper claim transactions received by payers, and the reduced pricing and margins in paper conversion services across the industry, ENS utilizes the services of business partners to process paper transactions in order to improve efficiencies and profitability and does not endeavor to grow this aspect of ENS’ business. We remain strategically focused on growing our higher margin core electronic transaction services and will continue to enhance our service offerings in this area. ENS will continue to support its proven complete cycle model through strategic business partners wherever it is financially and strategically prudent.

~~Services~~Other ~~Revenue~~Income:

~~Services~~The ~~revenue~~Company’s arbitration ~~increased~~with ~~from~~a ~~$4,373,436~~major incustomer ~~the~~over ~~three~~additional ~~months~~business ~~ended~~opportunities ~~March 31,~~was ~~2004~~resolved towith an award of $41,~~770~~000,~~308~~757 to ENS, which was paid in ~~the~~August, ~~three~~2005. ~~months~~During the quarter ended ~~March~~December 31, 2005, ~~(approximately~~ENS ~~9%), primarily~~received ~~due~~an toadditional ~~growth~~award inof ~~sales~~$262,729 representing torecovery ~~providers~~of ~~and~~a portion of the related ~~payer~~legal ~~income~~costs.

Cost of Services:

Cost of services ~~decreased~~increased from $24,~~266~~600,~~042~~800 in the ~~three~~six months ended March 31, ~~2004~~2005 to $24,~~255~~636,~~419~~ 485 in the ~~three~~six months ended March 31, ~~2005~~2006 (or approximately 50.8%)~~, due to additional labor being capitalized for software development projects and lower benefit costs~~. Included in cost of services for the ~~three~~six months ended March 31, ~~2004~~2005 and March 31, ~~2005~~ 2006 is amortization of proprietary software ~~costs~~used to provide services directly to specific customers, and depreciation of furniture and equipment, of $~~310~~658,~~602 and~~629 and $~~339~~852,~~313~~355, respectively (an increase of approximately 29.4%). Cost of sales exclusive of depreciation and amortization decreased approximately 4.0% reflecting a 22.8% increase in wages capitalized to software development due to an increase in signed contracts requiring development, declining costs related to declining transaction volumes from a significant customer offset by increased revenue sharing costs for EDI transaction processing.

Professional Fees:

Professional fees ~~increased~~ decreased from $35187,~~100~~700 in the ~~three~~six months ended March 31, ~~2004~~2005 to $96173,700 in the ~~three~~ six months ended March 31, ~~2005~~2006 (or approximately ~~175~~7.5%) as a result of the completion of the arbitration proceedings ~~with~~against a major customer. ~~over~~See Other ~~additional~~Income ~~business~~for ~~opportunities~~a further discussion of the arbitration award received by ENS.

Selling, General and Administrative:

~~General~~Selling, ~~and~~general and administrative expense ~~increased~~decreased from $13,~~051~~633,~~219~~421 in the ~~three~~six months ended March 31, ~~2004~~2005 to $13,~~144~~495,~~771~~385 in the ~~three~~six months ended March 31, ~~2005~~2006 (~~approximately~~or 9approximately 3.8%) ~~reflecting~~as ~~business~~a ~~growth~~result inof ~~EDI~~lower ~~transactions~~office ~~with~~and ~~providers~~equipment ~~and~~rental ~~payers~~costs, ~~and~~decreased ~~increased~~postage ~~legal~~costs ~~fees~~related ~~from~~to ~~the~~lower ~~arbitration~~volumes ~~proceedings. This~~of ~~amount~~claims ~~excludes~~mailed ~~selling~~for ~~and advertising~~third inparties ~~the~~and ~~amount~~other ofcost ~~$495,694~~containment ~~and~~measures. ~~$684,778,~~These ~~and~~amounts ~~includes~~include professional fees ofas ~~$35,100 and~~noted ~~$96,700, for the three months ended March 31, 2004 and 2005, respectively~~above.

Depreciation and Amortization:

Depreciation and amortization increased from $76170,~~352~~054 in the ~~three~~six months ended March 31, ~~2004~~ 2005 to $85177,~~653~~840 in the ~~three~~six months ended March 31, ~~2005~~2006 (~~approximately~~or 12approximately 4.6%), ~~primarily~~ due to ~~amortization~~the purchase of additional ~~software~~computer ~~development projects~~equipment.

Income from Operations:

As a result of the foregoing ~~events~~and the following, income from operations increased from $~~484~~1,~~129~~013,814 for in the ~~three~~six months ended March 31, ~~2004~~2005 (10.8% of revenue) to $~~599~~1,~~687~~512,983 (15.4% inof revenue) for the ~~three~~six months ended March 31, ~~2005~~2006. We

21Interest Expense:

~~believe~~Interest expense, ~~ENS~~exclusive ~~will continue~~of ~~profitable~~interest ~~operations~~payable ~~throughout~~to NWH, decreased from $6,565 in the six months ended March 31, 2005 to $2,203 in the six months ended March 31, 2006 (or approximately 66.4%), primarily due to ENS’ repayment of all capital

~~Interest Expense:~~17

~~Interest expense,~~leases ~~exclusive of interest payable to NWH, decreased from $8,210~~ in ~~the~~fiscal ~~three months ended March 31, 2004 to $3,093 (approximately 62%) in the three months ended March 31,~~ 2005~~, primarily due to a decrease in the average debt outstanding during the quarter ended March 31, 2005~~. For the ~~three~~six months ended March 31, ~~2004 and March 31~~2006, ~~2005,~~ $8149,~~262~~011 ~~and~~of interest ~~$41,714,~~expense ~~respectively,~~was ofrecognized ~~interest expensed~~ by ENS as payable to ~~the~~NWH ~~Company~~and was eliminated in consolidation.

~~EBITDA~~Segment Income:

~~EBITDA~~Segment ~~increased~~income increased from $~~871~~1,~~083~~842,498 for the ~~three~~six months ended March 31, ~~2004~~ 2005 to $12,~~024~~543,~~653~~178 for the ~~three~~six months ended March 31, ~~2005,~~2006 (or approximately 38.0%) primarily as a result of ~~increased~~the ~~business~~increase ~~levels. We~~in ~~provide~~services ~~EBITDA~~revenues, ~~(earnings~~overall ~~before~~gain ~~interest,~~from ~~taxes,~~operations ~~depreciation~~ and ~~amortization)~~receipt ~~information~~of ~~as a guide to~~ the ~~operating~~arbitration ~~performance of ENS. EBITDA~~award, ~~which~~as isdiscussed ~~not~~above. aWe ~~term~~calculate ~~recognized under~~segment ~~generally~~income ~~accepted accounting principles, is calculated~~ as ~~the net~~ income ~~plus net~~before ~~interest,~~ income taxes ~~(benefit)~~excluding interest, depreciation and amortization. ~~Included in~~See ~~depreciation~~Note ~~and~~6 ~~amortization~~to ~~for~~ the ~~purpose~~Consolidated ofFinancial ~~calculating~~Statements ~~EBITDA~~for isa ~~depreciation~~presentation of ~~equipment~~segment ~~and amortization of software costs~~income. ~~EBITDA as calculated by the Company may not be comparable to calculations of similarly titled items reported by other companies.~~

~~Interest~~LIQUIDITY ~~receivable~~AND byCAPITAL the Company from ENS was $8,754 at April 30, 2005, for a total outstanding loan to the Company of $5,147,739, including accrued interest. During the quarter ending April 30, 2005, $600,000 of the amount owed by ENS to the Company under these loans was paid. These payments are reflected in the total outstanding loan as of April 30, 2005. The outstanding balance under this loan agreement including interest has been eliminated from the consolidated Financial Statements.RESOURCES

~~Use~~As of ~~Non~~April 30, 2006, we had approximately $18.9 million in cash and cash equivalents. Our assets have been used for, and are currently reserved to fund development of our healthcare e-~~GAAP~~commerce ~~Financial~~business ~~Measures:~~and development and acquisition of new technologies and businesses in other areas. Such amount, with earnings thereon, is expected to be sufficient to implement this business plan through January 2007, or for a shorter period if we decide to invest a substantial portion of our assets in major acquisitions, equity investments or stock repurchases. We actively seek to acquire or invest in healthcare e-commerce and other businesses in unrelated areas.

~~Certain~~Our ~~disclosures~~board inof ~~this~~directors ~~document~~authorized ~~include~~the ~~“non-Generally~~repurchase ~~Accepted~~of ~~Accounting Principles “non-GAAP”) financial~~up ~~measures.” A~~to ~~non-GAAP financial~~20% ~~measure~~of isour ~~defined~~common asstock abecause ~~numerical~~we ~~measure~~believe, ofunder acurrent ~~company’s~~market ~~financial~~conditions, ~~performance~~the ~~that~~repurchase ~~excludes~~is ora ~~includes~~favorable ~~amounts~~investment. soThe asrepurchased toshares bewill ~~different~~also ~~than the~~be ~~most~~available ~~directly~~for ~~comparable~~issuance ~~measure~~upon ~~calculated~~exercise ~~and~~of ~~presented~~outstanding inoptions. ~~accordance~~We ~~with~~repurchased ~~GAAP~~11,772 shares in the ~~Consolidated~~quarter ~~Statements~~ended ~~of Earnings~~April 30, ~~Balance~~2006 ~~Sheets~~for oran ~~Statements of~~aggregate ~~Cash~~cost ~~Flows~~ of ~~the Company. As~~ ~~required~~$140,795. byThrough ~~the~~April 30, ~~SEC’s~~2006, ~~recently~~we ~~issued~~have ~~Regulation~~repurchased G,an aaggregate ~~reconciliation~~ of ~~EBITDA~~ ~~(earnings before interest~~431,372 ~~taxes,~~shares ~~depreciation~~for ~~and~~an ~~amortization)~~aggregate ~~with~~cost ~~the~~of ~~most directly comparable GAAP measure follows:~~$5,260,704.

~~EBITDA:~~In the first two quarters of fiscal year 2006, each of the four quarters of fiscal years 2005 and 2004 and the last two quarters of fiscal year 2003, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share plus a special dividend of $0.20 per share, with each such dividend being paid in cash to all holders of record as of the close of business on a specific date. On February 13, 2006, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share plus a special dividend of $0.20 per share. The dividend, aggregating $0.50 per share, was paid in cash on May 10, 2006, to holders of record at the close of business on April 27, 2006. The Company reviews its dividend policy on a quarterly basis.

WeDuring ~~define~~the ~~EBITDA~~six asmonths ~~net~~ended ~~income~~April 30, ~~plus~~2006, ~~net~~the ~~interest,~~Company ~~income~~spent ~~taxes (benefit)~~$1,302,107 ~~depreciation~~on ~~and~~fixed ~~amortization. We~~assets, ~~believe~~including ~~that~~$1,064,599 ~~the~~for ~~most directly comparable~~internally ~~GAAP~~developed ~~financial~~software ~~measure~~and to$237,508 ~~EBITDA~~for iscomputer ~~net~~and ~~income. In~~office ~~the~~equipment ~~discussion~~required offor increased ~~ENS’~~transaction ~~EBITDA above~~processing, ~~the~~new ~~difference~~payer ~~between~~contracts ~~EBITDA~~ and ~~ENS’~~other ~~net~~business ~~income~~growth. The ~~(which~~expenditures ~~does~~for ~~not~~internally ~~include~~developed ~~provision~~software ~~for~~increased ~~taxes)~~109.5% ~~(i) for~~ over the second ~~three~~quarter ~~months~~of ~~ended~~fiscal ~~March 31,~~ 2005, ~~$1,024,653~~due ~~and~~to ~~$607,803,~~additional ~~respectively,~~new ~~consisted~~payer ofcontracts ~~$8,116~~for ofEDI ~~net~~and PASS ~~interest,~~services ~~$339,313~~requiring ofhigher ~~depreciation and~~levels ~~amortization~~ of ~~software~~development, ~~costs~~development ~~and depreciation~~ of ~~equipment~~ECT, ~~included in~~an ~~costs~~Internet ofbased ~~services~~electronic ~~and~~claims ~~$85~~tracking system,~~653~~ ~~of depreciation~~ and ~~amortization~~the ~~and~~Company’s ~~(ii) for~~Internet claims processing system.

22Operating overhead costs of ENS have increased at a slightly slower rate than revenue as a result of cost cutting measures and production efficiencies gained. Due to the expiration of a significant contract in October 2006 as discussed below, we anticipate pressure on revenue growth over the next two years. However, as we transition our business away from the less profitable paper business, of which the significant contract mentioned below made up 99%, and toward the more profitable EDI and PASSÔ businesses in which we have many contracts, we anticipate that our marginal profitability will improve.

~~the~~ENS ~~six months ended March 31, 2005, $1,842,497~~- ~~and~~Liquidity ~~$1,027,245, respectively, consisted primarily of $13,431 of net interest, $658,629 of depreciation~~ and ~~amortization~~Capital ~~of software costs and depreciation of equipment included in costs of services and $170,054 of depreciation and amortization.~~Resources:

~~EBITDA is presented as additional information because we believe it is a useful indicator of an entity~~ENS’s ~~debt capacity and~~early ~~its~~operations ~~ability~~were tofinanced ~~service~~principally ~~its~~through ~~debt. EBITDA is~~equity ~~not~~investments aby ~~substitute~~NWH (for this ~~operating income~~purpose, ~~net~~the ~~earnings~~“Parent orCompany”) ~~cash~~and ~~flows~~loans from ~~operating~~ ~~activities,~~the asParent ~~determined~~Company, inand these ~~accordance~~loans ~~with~~totaled ~~generally~~$2,588,228 ~~accepted accounting~~through ~~principles. EBITDA~~March 31, is2006 ~~not a~~(including ~~complete~~previously ~~net~~accrued ~~cash~~interest ~~flow~~of ~~measure~~$1,258,985 ~~because~~that ithad isbeen aconverted ~~financial~~to ~~performance measure that~~principal). ~~does~~During ~~not~~the ~~include~~six ~~reductions~~months ~~for~~ended ~~cash~~March 31, ~~payments~~2006, ~~for~~ENS anrepaid ~~entity’s~~$1,150,000 ~~obligation~~of tothese ~~service~~loans ~~its~~to ~~debt,~~the ~~fund~~Parent ~~its~~Company ~~working capital~~ and ~~capital~~anticipates ~~expenditures,~~making ~~and~~additional ~~pay~~repayments for ~~its~~the ~~income~~foreseeable ~~taxes~~future. ~~EBITDA~~ isENS ~~not~~plans ~~a complete~~additional ~~measure~~investment ofin anits ~~entity’s profitability because it does not include costs~~technology ~~and~~enhancements, ~~expenses~~including ~~for~~further ~~interest~~development and ~~income~~implementation ~~taxes~~of ~~and~~XpediteTM, ~~depreciation~~its ~~and amortization. Rather~~full ~~EBITDA~~contact ~~is a potential~~management ~~indicator~~operating ofsystem; anits ~~entity’s~~Internet ~~ability~~claims toprocessing ~~fund~~system; ~~these~~hosting ~~cash~~of ~~requirements.~~additional HIPAA transactions; ~~EBITDA~~ECT, asan ~~we define it may differ from~~Internet ~~similarly~~based ~~named~~electronic ~~measures~~claims ~~used~~tracking bysystem; ~~other~~additional ~~entities~~payer ~~and,~~connectivity; ~~consequently, could be~~and ~~misleading~~enhancements ~~unless~~to ~~all~~broaden ~~entities calculate and define EBITDA in~~ the ~~same~~transactions ~~manner~~processing infrastructure.

~~LIQUIDITY AND CAPITAL RESOURCES~~18

AsWith ~~of April 30, 2005~~the wecontinually ~~had~~decreasing ~~approximately~~number ~~$23.7 million in cash and cash equivalents, as well as our interest in ENS. Our assets have been used for, and are currently reserved to fund development~~ of ~~our~~paper ~~current businesses,~~claims ~~acquisitions~~transactions ofreceived ~~healthcare~~by ~~e-commerce businesses~~payers, ~~and development~~ and ~~acquisition~~the ofreduced ~~new~~pricing ~~technologies~~ and ~~businesses~~margins in ~~other~~paper ~~areas. Such~~conversion ~~amount,~~services ~~with~~across ~~earnings thereon~~the industry, ~~is expected~~ENS toutilizes bethe ~~sufficient~~services toof ~~implement this~~ business ~~plan~~partners ~~through October 2005, or for a shorter period if we determine~~ to ~~invest~~process ~~a substantial portion of our~~paper ~~assets~~transactions in ~~major~~order ~~acquisitions,~~to ~~equity~~improve ~~investments~~efficiencies orand ~~stock repurchases~~profitability. We ~~actively seek to acquire or invest in~~remain ~~healthcare~~strategically ~~e-commerce~~focused oron ~~other~~our ~~businesses~~higher inmargin ~~telecommunications,~~core ~~media~~electronic ortransaction inservices ~~unrelated~~and ~~areas. We~~will ~~may~~continue ~~also~~to ~~dispose~~enhance ~~of assets~~our ~~from~~service ~~time to time~~offerings. We ~~have~~ENS ~~no specific~~will ~~arrangements~~continue ~~with respect~~ to support ~~any~~its ~~such~~proven ~~acquisitions,~~complete ~~dispositions~~cycle ~~or investments~~model atthrough ~~the~~strategic ~~present~~business ~~time. There~~partners ~~can~~wherever beit nois ~~assurance~~financially ~~that~~and ~~any~~strategically ~~such acquisitions, dispositions or investments will be made~~prudent.

~~Our~~In accordance with ~~board~~the terms of ~~directors~~the ~~authorized~~Company’s ~~the~~services ~~repurchase~~agreement ofwith upFiserv toHealth, Inc. (FHI), ~~20%~~one of ~~our~~ENS’ ~~common~~largest ~~stock~~paper customers, FHI terminated the services ~~because~~agreement weeffective ~~believe~~October 31, ~~under~~2006. ~~current~~In ~~market conditions~~2004, ENS initiated arbitration proceedings against FHI alleging that FHI had breached the ~~repurchase~~services isagreement. The matter was arbitrated in 2005 and, as a result ENS was awarded $1,000,757 in an ~~favorable~~initial ~~investment. Through~~award ~~April 30~~and an additional $262,729 of costs in the final award. The ~~2005~~arbitration panel found that “Fiserv breached the agreement. The breach was material.” In addition, the ~~Company~~arbitration panel ~~has~~did ~~repurchased~~find an“in ~~aggregate~~favor of ~~418,600~~ENS” ~~shares~~as ~~for~~it arelates ~~total~~to Fiserv’s willful misconduct. Paper ~~cost~~services for FHI accounted for 31%, 29% and 25% of $5ENS’ revenues in fiscal years 2004 and 2005 and the six months ended March 31,~~106,239~~ 2006. ~~The~~ ~~repurchased~~However, ~~shares~~there ~~will~~is ~~also~~no beassurance ~~available~~that ~~for~~FHI ~~issuance~~will ~~upon~~continue ~~exercise~~any ofENS ~~outstanding~~services past October 31, ~~options~~2006. We ~~did~~anticipate ~~not~~that ~~repurchase~~this ~~any~~customer will generate approximately 24% and 1% ~~shares~~of ENS’ revenues in fiscal ~~2004~~years or2006 and 2007 with revenues declining gradually throughout fiscal 2006 and dropping dramatically in the first quarter of fiscal ~~2005~~2007. We expect the costs of these services to decline correspondingly as all costs are variable with production volumes. We anticipate that the termination of this agreement will have little effect on ENS’ overall profitability due to the recent signing of two new contracts for pre-adjudication and EDI services. The systems development required for these contracts has been completed. While the revenues generated by these contracts are not expected to make up for the revenues lost from the terminated agreement, ~~but~~the ~~did~~profits ~~repurchase~~generated by the transactions to be processed by these 1systems are anticipated to replace and,~~000~~ ~~shares~~eventually, ofexceed ~~treasury~~the ~~stock~~profits ~~during~~lost by the ~~second~~terminated ~~quarter~~agreement. We believe that ENS’ results will continue to improve, reflecting the quality of its services, in fiscal ~~2005~~2006 and into 2007.

23Although we believe that ENS may need to obtain additional financing to accelerate its strategic business plan, based upon existing contracts with physicians, other providers, payers and management companies and current expense levels, management expects ENS to continue profitable operations through fiscal 2006.

~~In each of the previous seven~~TABULAR ~~quarters~~DISCLOSURE ~~(commencing~~OF inCONTRACTUAL July 2003), the Board of Directors of the Company declared a quarterly dividend of $0.30 per share plus a special dividend of $0.20 per share, with each such dividend being paid in cash to all holders of record as of the close of business on a specific date. On February 7, 2005, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share plus a special dividend of $0.20 per share. The dividend, aggregating $0.50 per share, was paid in cash on May 4, 2005, to holders of record at the close of business on April 29, 2005. On May 2, 2005, the Board of Directors of the Company declared a quarterly dividend of $0.30 per share plus a special dividend of $0.20 per share. The dividend, aggregating $0.50 per share, will be payable in cash on August 4, 2005, to holders of record at the close of business on July 29, 2005. The Company reviews its dividend policy on a quarterly basis.OBLIGATIONS

During the fiscal year ended October 31, 2004, we settled our option liabilities on BellSouth common stock, sold our remaining holdings of BellSouth common stock and invested cash in U.S. government treasury bills. During the quarter ended April 30, 2004, we liquidated our investment in U.S. government treasury bills and invested the cash liquidated thereby, along with additional cash, in preferred index funds.

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations	$	140,000	$	—	$	140,000	$	—	$	—
Capital Lease Obligations	—		—		—		—		—
Operating Lease Obligations	298,551		244,703		53,848		—		—
Purchase Obligations	—		—		—		—		—
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under GAAP	—		—		—		—		—

Total	$	438,551	$	244,703	$	193,848	$	—	$	—

~~During~~CRITICAL ~~the~~ACCOUNTING first two quarters of 2005, the Company spent $767,868 on fixed assets, including $508,042 for internally developed software and $259,826 for computer and office equipment required for increased claims processing, new payer contracts and other business growth.POLICIES

~~Operating~~The Company ~~overhead~~capitalizes purchased software which is ready for service and development costs for software incurred from the time the preliminary project ofstage ~~ENS~~is ~~have~~completed ~~increased~~until atthe asoftware ~~slower~~is ~~rate~~ready ~~than~~for ~~revenue~~use. asUnder athe ~~result~~provisions of Statement ~~cost~~of ~~cutting~~Position 98-1, “Accounting for the Costs of Computer ~~measures~~Software Developed or Obtained for Internal Use” (SOP 98-1), the Company capitalizes costs associated with software developed or obtained for internal use when both the preliminary project state is completed and ~~production~~the ~~efficiencies~~Company management ~~gained.~~has Weauthorized ~~anticipate~~further ~~increased~~funding ~~revenues~~for the project which it deems inprobable to be completed and used to perform the ~~near~~function ~~future~~intended. ~~The~~ ~~combination~~Capitalized costs include only (1) external direct costs of materials and services ~~these~~consumed ~~factors~~in ~~going~~developing ~~forward~~or ~~will~~obtaining ~~improve~~internal-use ~~overall~~software, ~~profitability~~(2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project, ~~allowing~~and ~~ENS~~(3) interest costs incurred, when material, while developing internal-use software. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. Capitalized software development costs are amortized using the straight-line method generally over four years, not to exceed the expected life of the product or related contract. ~~sustain~~The ~~itself~~carrying onvalue of capitalized software development costs is regularly reviewed by the Company, and a loss is recognized if the value of estimated undiscounted cash flows ~~from~~related ~~its~~to ~~operations~~the ~~without~~asset ~~further~~falls ~~investment from~~below ~~NWH~~the unamortized costs.

~~ENS - Liquidity and Capital Resources:~~19

~~ENS’~~Research ~~historical losses were financed principally through equity investments by the Company~~ and ~~loans~~development ~~from~~costs ~~the Company,~~ and ~~these~~computer ~~loans~~software ~~totaled~~maintenance ~~$5,538,985~~costs ~~through~~related ~~March 31, 2005 (including previously accrued interest that had been converted~~ to ~~principal). ENS~~software ~~plans additional investment in its technology enhancements, including further~~ development ~~and implementation~~are ofexpensed ~~XpediteTM,~~as its full contact management operating system; its Internet claims processing system; hosting of new HIPAA transactions; ECT, an Internet based full claims tracking system; additional payer connectivity; and enhancements to broaden the transactions processing infrastructureincurred.

~~Although~~RECENT weACCOUNTING believe that ENS may need to obtain additional financing to accelerate its strategic business plan, based upon existing contracts with physicians, other providers, payers and management companies and current expense levels, management expects ENS to continue profitable operations, established in the third quarter of fiscal 2001, through fiscal 2005.PRONOUNCEMENTS

24All recent accounting pronouncements have either been adopted or are currently not applicable.

~~TABULAR~~ITEM ~~DISCLOSURE~~3. QUANTITATIVE AND OFQUALITATIVE ~~CONTRACTUAL~~DISCLOSURES ~~OBLIGATIONS~~ABOUT MARKET RISK

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years	More than 5 years
Long-Term Debt Obligations	—		—		—		—	—
Capital Lease Obligations	$	3,856	$	3,856	—		—	—
Operating Lease Obligations	$	703,030	$	423,516	$	279,514	—	—
Purchase Obligations	—		—		—		—	—
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under GAAP	—		—		—		—	—
Total	$	706,886	$	427,372	$	279,514	—	—

The primary objective of our investment activities, other than activities relating to ENS and potential acquisitions, is to preserve principal and maintain liquidity, while at the same time maximizing the yield we receive from our investment portfolio.

~~CRITICAL~~Changes in ~~ACCOUNTING~~prevailing ~~POLICIES~~interest rates will cause the yield on our investments to fluctuate. To minimize this risk, we maintain our portfolio of cash equivalents, short-term investments and marketable securities in commercial paper, non-government debt securities, money market funds, highly liquid U.S. Treasury notes and federal agency notes and other low risk investments. We view these high grade securities within our portfolio as having similar market risk characteristics. The weighted-average interest rate of the portfolio was 4.4% at April 30, 2006.

~~ENS capitalizes purchased~~Currently ~~software~~almost ~~which~~all isour ~~ready~~revenues ~~for service~~ and ~~development~~expenses ~~costs~~are ~~for~~denominated ~~software~~in ~~incurred from the time the preliminary project stage is completed until the software is ready for use~~U. ~~Under~~S. ~~the~~dollars ~~provisions of Statement of Position 98-1~~and, ~~Accounting~~as ~~for the Costs~~a ~~of Computer Software Developed or Obtained for Internal Use (SOP 98-1)~~result, ~~the~~ ~~Company~~we ~~capitalizes~~have ~~costs~~experienced ~~associated~~no ~~with~~significant ~~software~~foreign ~~developed~~exchange orgains ~~obtained for internal use when both the preliminary project stage is completed~~ and ~~Company~~ ~~management~~losses ~~has authorized further funding for the project which it deems probable will be completed and used~~ to ~~perform the function~~ ~~intended~~date. ~~Capitalized~~ ~~costs~~We ~~include~~conduct only ~~(1) external~~ ~~direct~~limited ~~costs~~transactions ~~of materials and services consumed~~ in ~~developing or~~foreign ~~obtaining internal-use software~~currencies, ~~(2) payroll~~ and ~~payroll-related~~we ~~costs~~do not ~~for~~anticipate ~~employees~~that ~~who~~foreign ~~are~~exchange ~~directly~~gains ~~associated~~or ~~with~~losses ~~and~~will ~~who~~be ~~devote~~significant ~~time~~in to the ~~internal-use~~foreseeable ~~software project, and (3) interest costs incurred, when material, while developing internal-use software~~future. ~~Capitalization~~ ofWe ~~such~~have ~~costs~~not ~~ceases~~engaged noin ~~later than~~foreign ~~the~~currency ~~point~~hedging ~~at which the project is substantially complete and ready for its~~activities ~~intended~~to ~~purpose~~date.

~~Research~~ITEM ~~and development costs and computer software maintenance costs related to software development are expensed as incurred~~4. ~~Capitalized software~~ CONTROLS ~~development~~AND costs are amortized using the straight-line method generally over four years, not to exceed the expected life of the product. The carrying value of capitalized software development costs is regularly reviewed by the Company, and a loss is recognized if the value of estimated undiscounted cash flow benefit related to the asset falls below the unamortized cost.PROCEDURES

25As of April 30, 2006, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of the Company’s management. Based on that evaluation, management has concluded that the Company’s disclosure controls and procedures are effective to ensure that material information relating to the Company and its consolidated subsidiaries is made known to them, as of April 30, 2006. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended April 30, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~RECENT~~PART II ~~ACCOUNTING~~- ~~PRONOUNCEMENTS~~OTHER INFORMATION

InItem ~~December, 2004, the FASB issued FASB statement No~~1. ~~123R, “Share-Based Payment” (FAS 123R), a revision of FASB~~ LEGAL statement No. 123, “Accounting for Stock-Based Compensation” which addresses financial accounting and reporting for costs accounted with stock-based compensation. FAS 123R addresses all forms of share-based payment (“SBP”) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. FAS 123R requires the Company to adopt the new accounting provisions beginning in our fourth quarter of 2005. Under the Modified Prospective Method, we do not anticipate recording any compensation expense at time of adoption since all options granted were fully vested.PROCEEDINGS

~~ITEM~~The 3Company is a party to various claims in the ordinary course of business. ~~QUANTITATIVE~~Management ~~AND~~believes ~~QUALITATIVE~~that ~~DISCLOSURES~~the ~~ABOUT~~aggregate ~~MARKET~~impact ~~RISK~~of such claims, if any, will not have a material impact on the financial position, results of operations, or liquidity of the Company.

~~The primary~~Item ~~objective~~2. ofUNREGISTERED ~~our~~SALES ~~investment~~OF ~~activities, other than activities relating~~EQUITY toSECURITIES ~~ENS~~AND ~~and~~USE ~~potential~~OF ~~acquisitions, is to preserve principal and maintain liquidity, while at the same time maximizing the yield we receive from our investment portfolio.~~PROCEEDS

~~Changes in~~Not ~~prevailing interest rates will cause the yield on our investments and the costs of shorts and options to fluctuate~~applicable. To minimize this risk, we maintain our portfolio of cash equivalents, short-term investments and marketable securities in commercial paper, non-government debt securities, money market funds, highly liquid U.S. Treasury notes and federal agency notes and other low risk investments. We view these high grade securities within our portfolio as having similar market risk characteristics. The weighted-average interest rate of the portfolio was 3.4% at April 30, 2005.

~~Currently almost~~Item ~~all our revenues and expenses are denominated in U~~3.S. ~~dollars~~DEFAULTS ~~and,~~UPON asSENIOR a result, we have experienced no significant foreign exchange gains and losses to date. We conduct only limited transactions in foreign currencies, and we do not anticipate that foreign exchange gains or losses will be significant in the foreseeable future. We have not engaged in foreign currency hedging activities to date.SECURITIES

~~ITEM 4. CONTROLS~~Not ~~AND PROCEDURES~~applicable.

AsItem of April 30, 2005, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was carried out under the supervision and with the participation of the Company’s management4. ~~Based~~ onSUBMISSION ~~that evaluation,~~OF ~~management~~MATTERS ~~has~~TO ~~concluded~~A ~~that~~VOTE ~~the Company’s disclosure controls and~~OF ~~procedures~~SECURITY are effective to ensure that material information relating to the Company and its consolidated subsidiaries is made known to them, as of April 30, 2005. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended April 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.HOLDERS

26Not applicable.

~~PART II~~Item - 5. OTHER INFORMATION

~~Item~~On 1May 25, 2006, the Company announced that it had entered into an Agreement and Plan of Merger dated as of May 25, 2006 (the “Merger Agreement”), with Ingenix, Inc. ~~LEGAL~~, a Delaware corporation (“Parent”), and Mogul Acquisition ~~PROCEEDINGS~~Corporation, a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent.

The ~~Company~~Merger isAgreement ~~engaged~~includes incustomary representations, warranties and ancovenants ~~arbitration~~of ~~with~~the aparties ~~major~~to ~~customer~~the ~~over~~merger. The ~~additional~~merger ~~business~~is ~~opportunities~~conditioned on the approval of the Company’s stockholders and certain other closing conditions.

~~Item~~Parent 2will pay $18. ~~UNREGISTERED~~24 per share of the Company’s common stock at the ~~SALES~~closing OFas ~~EQUITY~~merger ~~SECURITIES~~consideration ~~AND~~to ~~USE~~the OFCompany’s ~~PROCEEDS~~stockholders. The parties also intend to cancel all of the Company’s outstanding stock options at the closing, with payments to holders in respect of such cancellations in lump sum cash payments, reduced, but not below zero, by any exercise prices and tax withholdings. The Company and Parent currently expect the merger to close in the third calendar quarter of 2006.

~~Not~~In ~~applicable~~addition, the Company has agreed, among other things and subject to certain exceptions as described in the Merger Agreement, (i) to conduct its business in the ordinary course consistent with past practice during the interim period between the execution of the Merger Agreement and consummation of the merger, (ii) not to engage in certain transactions during such period and (iii) to cause a special stockholder meeting to be held to consider approval of the merger and the other transactions contemplated by the Merger Agreement.

~~Item 3. DEFAULTS UPON SENIOR SECURITIES~~20

~~Not~~The ~~applicable~~Merger Agreement prohibits the Company from soliciting or entertaining alternative business acquisition proposals, subject to certain exceptions for proposals that are determined in good faith to constitute or to be reasonably likely to constitute a superior proposal. The Merger Agreement also contains certain termination rights for both the Company and Parent. Either party may terminate the Merger Agreement if the merger is not consummated on or before September 30, 2006, if the merger is not approved by the Company’s stockholders or upon other customary events. Parent may terminate the Merger Agreement if the Company’s Board of Directors changes or does not reaffirm its recommendation of the merger. Upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay Parent a termination fee of approximately $2.15 million.

~~Item~~Parent 4has also executed voting agreements with stockholders who hold approximately 16. ~~SUBMISSION~~6% of the OFoutstanding ~~MATTERS~~voting TOstock Aof ~~VOTE~~the OFCompany, ~~SECURITY~~pursuant ~~HOLDERS~~to which the stockholders have given Parent a proxy to vote all of the shares of the Company’s common stock that the stockholders beneficially own in favor of adoption of the Merger Agreement and approval of the merger and against any alternative business acquisition proposal.

~~At its Annual Meeting of Stockholders held on May 2, 2005, the Company’s stockholders approved and ratified the following actions:~~21

1Item 6. ~~Election~~ ~~of Directors:~~EXHIBITS

The following individuals were re-elected as Class II directors of the Company:

(a)	Exhibits:
	Exhibit 31:	Certification of Periodic Report by Principal Executive Officer and
		Principal Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002

	Exhibit 32:	Certification of Periodic Report by Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes Oxley Act of 2002

	Number of Votes For	Number of Votes Withheld
Michael A. McManus, Jr.	2,441,046	88,205
Vincent Tese	2,517,620	11,631

~~to serve until the 2008 Annual Meeting of Stockholders and until their respective successors have been elected and qualified.~~SIGNATURE

~~2. 2,517,620~~Pursuant ~~shares~~to ~~were~~the ~~voted~~requirements ~~in favor~~ of the Securities ~~appointment~~Exchange Act of ~~McGladrey & Pullen~~1934, ~~LLP as independent auditors of~~ the ~~Company~~ ~~until~~registrant ~~the~~has ~~next~~duly ~~Annual~~caused ~~Meeting~~this ofreport ~~Stockholders,~~to ~~11,631~~be ~~shares~~signed on ~~were~~its ~~voted against,~~behalf ~~and~~by ~~there~~the ~~were~~undersigned nothereunto ~~abstentions~~duly authorized.

27Date: May 31, 2006

~~Item~~NWH, 5INC. ~~OTHER INFORMATION~~ (Registrant) By: /s/ TERRENCE S. CASSIDY Terrence S. Cassidy, President and Principal Accounting Officer

~~Not applicable.~~23

Item 6. EXHIBITS

(a)	Exhibits:
	Exhibit 31:	Certification of Periodic Report by Principal Executive Officer and Principal Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002
	Exhibit 32:	Certification of Periodic Report by Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: June 13, 2005
	NWH, INC.
	(Registrant)
	By:	/s/ Terrence S. Cassidy
	Terrence S. Cassidy, President and Principal Accounting Officer

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